INVESTORS TITLE CO (Form: 10-K, Received: 03/09/2009 16:59:23)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2008

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from __to __

Commission file number 0-11774

INVESTORS TITLE COMPANY
(Exact name of registrant as specified in its charter)

North Carolina	56-1110199
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

121 North Columbia Street
Chapel Hill, North Carolina 27514
(919) 968-2200
(Address and telephone number of principal executive office)

Securities registered pursuant to section 12(b) of the Act:	Name of each exchange on which registered:
Common Stock, no par value	NASDAQ Global Market
Rights to Purchase Series A Junior Participating Preferred Stock	NASDAQ Global Market

Securities registered pursuant to section 12(g) of the Act:
None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ] Smaller reporting company

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

The aggregate market value of the common shares held by non-affiliates was $82,336,510 based on the closing sales price on the NASDAQ Global Market on the last business day of the registrant’s most recently completed second fiscal quarter (June 30, 2008).

As of February 20, 2009, there were 2,294,118 common shares of the registrant outstanding

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Investors Title Company’s definitive proxy statement for the Annual Meeting of Shareholders to be held May 20, 2009 are incorporated by reference in Part III hereof.

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, as well as information included in future filings by the Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company, contains, or may contain, “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current outlook for future periods. These statements may be identified by the use of words such as “plan,” “expect,” “aim,” “believe,” “project,” “anticipate,” “intend,” “estimate,” “should,” “could” and other expressions that indicate future events and trends. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, product and service development, market share position, claims, expenditures, financial results and cash requirements, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events that are subject to a number of risks and uncertainties. Actual future results and trends may differ materially from historical results or those projected in any such forward-looking statements depending on a variety of factors, including, but not limited to, the following:

the level of real estate transactions, the level of mortgage origination volumes (including refinancing) and changes to the insurance requirements of the participants in the secondary mortgage market, and the effect of these factors on the demand for title insurance;
changes in general economic conditions, including the performance of the credit and real estate markets;
significant changes to applicable government regulations;
the possible inadequacy of provisions for claims to cover actual claim losses;
the incidence of fraud-related losses;
heightened regulatory scrutiny;
unanticipated adverse changes in securities markets, including interest rates, could result in material losses on the Company’s investments;
the Company’s dependence on key management personnel, the loss of whom could have a material adverse affect on the Company’s business;
the Company’s ability to develop and offer products and services that meet changing industry standards in a timely and cost-effective manner;
statutory requirements applicable to the Company’s insurance subsidiaries which require them to maintain minimum levels of capital, surplus and reserves and restrict the amount of dividends that they may pay to the Company without prior regulatory approval and
the concentration of key accounting and information systems in a few locations.

For a description of factors that may cause actual results to differ materially from such forward-looking statements, see Item 1A, “Risk Factors” of this Annual Report on Form 10-K.

These and other risks and uncertainties may be described from time to time in the Company’s other reports and filings with the Securities and Exchange Commission. The Company does not undertake to update any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

INVESTORS TITLE COMPANY AND SUBSIDIARIES

TABLE OF CONTENTS

PART I		4
ITEM 1.	BUSINESS	4
ITEM 1A.	RISK FACTORS	10
ITEM 1B.	UNRESOLVED STAFF COMMENTS	13
ITEM 2.	PROPERTIES	13
ITEM 3.	LEGAL PROCEEDINGS	13
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	14
	EXECUTIVE OFFICERS OF THE COMPANY	14

PART II		15
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER
	MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	15
ITEM 6.	SELECTED FINANCIAL DATA	16
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
	RESULTS OF OPERATIONS	17
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	31
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
	FINANCIAL DISCLOSURE	60
ITEM 9A.	CONTROLS AND PROCEDURES	60
ITEM 9B.	OTHER INFORMATION	60

PART III		61
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	61
ITEM 11.	EXECUTIVE COMPENSATION	61
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	AND RELATED STOCKHOLDER MATTERS	61
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
	INDEPENDENCE	61
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	61

PART IV		62
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	62

SIGNATURES		63
INVESTORS TITLE COMPANY INDEX TO EXHIBITS		72

PART I

ITEM 1. BUSINESS

GENERAL

Investors Title Company (the “Company”) is a holding company that operates through its subsidiaries and was incorporated in the state of North Carolina in February 1973. The Company became operational on June 24, 1976, when it acquired Investors Title Insurance Company (“ITIC”) as a wholly owned subsidiary under a plan of exchange of shares of common stock. On September 30, 1983, the Company acquired Northeast Investors Title Insurance Company (“NE-ITIC”), formerly Investors Title Insurance Company of South Carolina, as a wholly owned subsidiary under a plan of exchange of shares of common stock. The Company’s executive offices are located at 121 North Columbia Street, Chapel Hill, North Carolina 27514 and its telephone number is (919) 968-2200. The Company maintains a website at www.invtitle.com .

OVERVIEW OF THE BUSINESS

The Company engages in several lines of business. Its primary business activity is the issuance of residential and commercial title insurance through ITIC and NE-ITIC. The second line of business provides tax-deferred real property exchange services through its subsidiaries, Investors Title Exchange Corporation (“ITEC”) and Investors Title Accommodation Corporation (“ITAC”). The Company entered into the business of providing investment management and trust services to individuals, trusts and other entities in 2003. The Company has two reportable operating segments. The title insurance segment consists of the operations of ITIC and NE-ITIC. The exchange services segment consists of the operations of ITEC and ITAC. The Company’s remaining lines of business are not currently material enough to constitute reportable segments. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 13 of Notes to Consolidated Financial Statements in this Form 10-K Annual Report for additional information related to the revenues, income and assets attributable to the Company’s primary operating segments.

Title Insurance

Through its two wholly owned title underwriting subsidiaries, ITIC and NE-ITIC, the Company underwrites land title insurance for owners and mortgagees as a primary insurer. ITIC and NE-ITIC offer primary title insurance coverage to both owners and mortgagees of real estate and also offers the reinsurance of title insurance risks to other title insurance companies. Title insurance protects against loss or damage resulting from title defects that affect real property. The commitment and policies issued are predominantly the standard American Land Title Association (“ALTA”) approved forms.

Upon a real estate closing, the seller executes a deed to the new owner. When real property is conveyed from one party to another, occasionally there is an undisclosed defect in the title or a mistake or omission in a prior deed, will or mortgage that may give a third party a legal claim against such property. If a claim is made against real property, title insurance provides indemnification against insured defects.

A title defect is one of any number of things that could jeopardize the property owner’s or mortgagee’s interest in the property defined in the title policy. Such risks include title being vested in someone or some entity other than the insured, unmarketable title, lack of a right of access to the property, invalidity or unenforceability of the insured mortgage, or other defects, liens, or encumbrances against the property. Examples of common types of covered risks include defects arising from prior unsatisfied mortgages, tax liens or confirmed assessments, judgments against the property or encumbrances against the property arising through easements, restrictions or other existing covenants. Title insurance also generally protects against deeds or mortgages that contain inaccurate legal descriptions, that were forged or improperly acknowledged or delivered, that were executed by spouses without the other spouse’s signature or release of marital interest or that were conveyed by minors or incompetents.

Title Insurance Policies . There are two basic types of title insurance policies - one for the mortgage lender and one for the real estate owner. A lender often requires property owners to purchase title insurance to protect its position as a holder of a mortgage loan, but the lender’s title insurance policy does not protect the property owner. The property owner has to purchase a separate owner’s title insurance policy to protect their investment. The Company issues title insurance policies on the basis of a title report. The title report documents the current status of title to the property.

Insured Risk on Policies in Force . Generally, the amount of the insured risk or “face amount” of insurance on a title insurance policy is equal to the lesser of the purchase price of the insured property or the fair market value of the property. In the event that a claim is made against the property, the insurer is responsible for paying the legal costs associated with eliminating covered title defects or defending the insured party against covered title defects affecting the property. The insurer may choose to pay the policy limits to the insured or, if the loss is less than policy limits, the amount of the insured’s actual loss due to the title defect, at which time the insurer’s duty to defend the claim and all other obligations of the insurer with respect to the claim are satisfied.

At any given time, the insurer’s actual risk of monetary loss under outstanding policies is only a portion of the aggregate insured risk, or total face amount, of all policies in force. The lower risk results primarily from the reissuance of title insurance policies by other underwriters over time when the property is conveyed or refinanced. The coverage on a lender’s title insurance policy is reduced and eventually terminated as the mortgage loan it secures is paid. An owner’s policy is effective as long as the insured has an ownership interest in the property or has liability under warranties of title. Due to the variability of these factors, the aggregate contingent liability of a title underwriter on outstanding policies of the Company and its subsidiaries cannot be determined with any precision.

Losses and Reserves . While most other forms of insurance provide for the assumption of risk of loss arising out of unforeseen events, title insurance is based upon a process of loss avoidance. Title insurance generally serves to protect the policyholder from the risk of loss from events that predate the issuance of the policy. Losses on policies typically occur when a title defect is not discovered during the examination and settlement process or the occurrence of certain hidden risks which cannot be determined from an accurate search of public land records. The maximum amount of liability under a title insurance policy is generally the face amount of the policy plus the cost of defending the insured’s title against an adverse claim. Reserves for claim losses are established based upon known claims, as well as estimated losses incurred but not yet reported to the Company, based upon historical experience and other factors.

Title claims can often be complex, vary greatly in dollar amounts, are affected by economic and market conditions and may involve uncertainties as to ultimate exposure, and therefore, reserve estimates are subject to variability. For a more complete description of the Company’s reserves for claims, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K Annual Report.

Geographic Operations . ITIC was incorporated in the State of North Carolina on January 28, 1972, and became licensed to write title insurance in the State of North Carolina on February 1, 1972. At present, ITIC primarily writes land title insurance in 23 states, mostly in the eastern half of the United States. ITIC is licensed to write title insurance in 44 states and the District of Columbia.

NE-ITIC was incorporated in the State of South Carolina on February 23, 1973, and became licensed to write title insurance in that state on November 1, 1973. It currently writes title insurance as a primary insurer and as a reinsurer in the State of New York. NE-ITIC is also licensed to write title insurance in 19 additional states and the District of Columbia.

Premiums from title insurance written in the state of North Carolina represent the largest source of revenue for the title insurance segment. In the state of North Carolina, ITIC primarily issues title insurance commitments and policies through branch offices. Title policies are primarily issued through issuing agents in other states. For a description of the level of net premiums written geographically by state, refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.

Each state license authorizing ITIC or NE-ITIC to write title insurance must be renewed annually. These licenses are necessary for the companies to operate as a title insurer in each state in which they write premiums.

Ratings. The Company’s title insurance subsidiaries are regularly assigned ratings by independent agencies designed to indicate their financial condition and/or their claims paying ability. The rating agencies determine ratings primarily by analyzing financial data. ITIC has been rated by two independent Fannie Mae-approved financial analysis firms, Demotech, Inc. and LACE Financial Corporation (“LACE”), with financial stability ratings of A” (A Double Prime) and B, respectively. NE-ITIC’s financial stability also has been recognized by Demotech, Inc. and LACE with ratings of A” (A Double Prime) and A, respectively. According to Demotech, title underwriters earning a Financial Stability Rating of A’’ (A Double Prime) possess Unsurpassed financial stability related to maintaining positive surplus as regards policyholders, regardless of the severity of a general economic downturn or deterioration

in the title insurance cycle. A LACE rating of “A” or “B” indicates that a title insurance company has a strong overall financial condition that will allow it to meet its future claims, and that, generally, the company has good operating earnings, is well capitalized and has adequate reserves.

Reinsurance . The Company assumes and cedes reinsurance with other insurance companies in the normal course of business. Reinsurance is a contractual arrangement whereby one insurer assumes some or all of the risk exposure written by another insurer. Ceded reinsurance is comprised of excess of loss treaties, which protects against losses over certain amounts.

In the ordinary course of business, ITIC and NE-ITIC reinsure certain risks with other title insurers for the purpose of limiting their risk exposure and to comply with state insurance regulations. They also assume reinsurance for certain risks of other title insurers for which they receive additional income. For the last three years, revenues from reinsurance activities accounted for less than 1% of total premium volume.

Exchange Services

In 1988, the Company established Investors Title Exchange Corporation, a wholly owned subsidiary (“ITEC”), to provide services in connection with tax-deferred exchanges of like-kind property pursuant to Section 1031 of the Internal Revenue Code. ITEC acts as an intermediary in tax-deferred exchanges of property held for productive use in a trade or business or for investments, and its income is derived from fees for handling exchange transactions and interest earned on client deposits held by the Company.

Investors Title Accommodation Corporation (“ITAC”) provides services for accomplishing reverse exchanges when taxpayers decide to acquire replacement property before selling the relinquished property.

The services provided by the Company’s exchange segment are pursuant to provisions in the Internal Revenue Code. From time to time, these laws are subject to review and changes, which may negatively affect the demand for tax-deferred exchanges in general, and consequently the revenues and profitability of the Company’s exchange segment.

In July 2008, the Internal Revenue Service (“IRS”) finalized its proposed regulations regarding treatment of funds held by qualified intermediaries. As originally proposed, the rules would have negatively affected the ability of qualified intermediaries to retain a portion of the interest earned on exchange funds held during exchange transactions, which could have had a material adverse effect upon the profitability of the Company’s exchange segment. As adopted however, the new regulations apply only to individual exchange account balances over $2 million.

In addition, the final regulations clarify that qualified intermediaries may earn marketing fees from financial institutions. The Company currently believes that any marketing fees earned on deposits in the future would at least partially offset the loss of interest spread retained on exchange deposits under prior business practices. Consequently, the Company currently believes that the final regulations should not have a material impact on the earnings of the exchange services segment. The regulations however have only recently been adopted, and therefore the Company has had only limited experience under this new regime; it is possible that these new regulations may have unanticipated consequences that will negatively affect tax-deferred exchanges, which could have an adverse effect on the revenues and profitability of the Company’s exchange services segment. In addition, refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-K Annual Report for additional information regarding IRS regulations.

Investment Management and Trust Services

Other services provided include those offered by Investors Trust Company (“Investors Trust”), Investors Capital Management Company (“ICMC”), and Investors Title Management Services, Inc. (“ITMS”), all wholly owned subsidiaries of the Company. Investors Trust and ICMC work together to provide investment management and trust services to individuals, companies, banks and trusts. ITMS offers various consulting services to provide clients with the technical expertise to start and successfully operate a title insurance agency. These subsidiaries are not currently a reportable segment for which financial information is presented in the Company’s financial statements and are included and reported in the category All Other.

OPERATIONS OF SUBSIDIARIES

Title Insurance

ITIC and NE-ITIC issue title insurance coverage through direct operations or through partially owned or independent title insurance agents who issue title policies on behalf of ITIC or NE-ITIC. Title insurance premiums written reflect a one-time premium payment, with no recurring premiums.

Generally, premiums are recorded and recognized as revenue at the time of closing of the related transaction as the earnings process is considered complete. Where the policy is issued directly through a branch office, the premiums collected are retained by the Company. Where the policy is issued through a title insurance agent, the agent retains a majority of the premium as a commission. Title insurance commissions earned by the Company’s agents are recognized as expense concurrently with premium recognition. The percentage of the premium retained by agents varies by region to region and is sometimes regulated by the states.

For a description of the level of net premiums written by direct and agency operations, refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Exchange Services

ITEC and ITAC provide customer services in connection with tax-deferred exchanges pursuant to Section 1031 of the Internal Revenue Code. Acting as a qualified intermediary, ITEC holds the proceeds from sales of relinquished properties until the acquisition of identified replacement properties occurs. ITAC facilitates reverse tax-deferred exchanges pursuant to IRS Revenue Procedure 2000-37.

CYCLICALITY AND SEASONALITY

Title Insurance

Real estate activity is cyclical in nature. Title insurance premiums are closely related to the level of real estate activity and the volume of mortgage origination. A number of general and economic factors influence demand for title insurance, including changes in mortgage interest rates and the availability of mortgage financing, consumer confidence, economic conditions, supply and demand and family income levels.

The title insurance business tends to be seasonal as well as cyclical. Historically, the winter months have the least real estate activity because fewer real estate transactions occur, while the remaining quarters are more active. Refinance activity is generally less seasonal, but it is subject to interest rate fluctuations. The Company anticipates that current market conditions, including weakening home sales and falling home prices, rising foreclosures and the sub prime lending crisis, will be the primary influences on the Company’s operations until some stabilization occurs.

Exchange Services

Seasonal and other factors affecting the level of real estate activity and the volume of title premiums written will also generally affect the demand for exchange services.

MARKETING

Title Insurance

The Company markets its title insurance services to a broad range of customers in the residential and commercial market sectors of the real estate industry. Issuing agents are typically real estate attorneys or subsidiaries of community and regional mortgage lending institutions, depending on local customs and regulations and the Company’s marketing strategy in a particular territory.

ITIC and NE-ITIC strive to provide superior service to their customers and consider this an important factor in attracting and retaining customers. Branch and corporate personnel strive to develop new business and agency relationships to increase market share and ITIC’s Commercial Services Division provides services to commercial clients.

Exchange Services

Marketing of tax-deferred exchange services offered by ITEC and ITAC has been incorporated into the marketing of the core title products offered by ITIC and NE-ITIC. The Commercial Services Division of ITIC also markets the services offered by ITEC and ITAC to its commercial clients.

REGULATION

Title Insurance

The Company is an insurance holding company and therefore it is subject to regulation in the states in which its insurance subsidiaries do business. These regulations, among other things, require insurance holding companies to register and file certain reports and require prior regulatory approval of the payment of dividends and other intercompany distributions or transfers.

Title insurance companies are extensively regulated under applicable state laws. All states have requirements for admission to do business as an insurance company, including minimum levels of capital and surplus and establishing reserves. State regulatory authorities monitor the stability and service of insurance companies and possess broad powers with respect to the licensing of title insurers and agents, approving rate schedules and policy forms, financial reporting and accounting practices, reserve requirements, investments and dividend restrictions, as well as examinations and audits of title insurers. Both ITIC and NE-ITIC meet the statutory premium reserve requirements and the minimum capital and surplus requirements of the states in which they are licensed. A substantial portion of the assets of the Company’s title insurance subsidiaries consists of their portfolios of investment securities. Both of these subsidiaries are required by various states’ laws to maintain assets of a defined quality and amount.

The Company’s two insurance subsidiaries are subject to examination at any time by the insurance regulators in the states where they are licensed. These and other governmental authorities have the power to enforce state and federal laws to which the title insurance subsidiaries are subject, including but not limited to, the Real Estate Settlement Procedures Act (“RESPA”).

The United States Department of Housing and Urban Development (“HUD”) published final rules regarding RESPA on November 17, 2008. The new rules became effective on January 16, 2009. Among other reforms, these new rules require lenders and mortgage brokers to provide consumers with a standard good faith estimate that more clearly discloses loan terms and closing costs, including title insurance premiums and charges, and facilitates comparison shopping by home buyers. HUD has also indicated that it intends to seek legislative changes to RESPA that will complement the rules and provide HUD with enforcement mechanisms for some of the most important consumer disclosures and protections.

Proposals to change the laws and regulations governing insurance holding companies and the title insurance industry are often introduced in Congress, in the state legislatures and before the various insurance regulatory agencies. The Company regularly monitors such proposals and legislation, although the likelihood and timing of them and the impact they may have on the Company and its subsidiaries cannot be determined at this time.

Any material change in the Company’s regulatory environment may have an adverse effect on its business.

Exchange Services

Intermediary services are not federally regulated by any regulatory commissions, and neither ITEC nor ITAC operate in any states that regulate this industry. ITEC and ITAC both provide services to taxpayers pursuant to IRS regulations that provide taxpayers a safe harbor by using a qualified intermediary to structure tax-deferred exchanges of property and using an exchange accommodation titleholder to hold property in reverse exchange transactions.

Investment Management and Trust Services

Investors Trust is regulated by the North Carolina Commissioner of Banks.

COMPETITION

Title Insurance

The title insurance industry is highly competitive. ITIC’s and NE-ITIC’s major competitors together comprise a majority of the title insurance market on a national level. The number and size of competing companies varies in the different geographic areas in which the Company conducts business. Key factors that affect competition in the title insurance industry are timeliness and quality of service, price, expertise and the financial strength and size of the insurer. Title insurance underwriters also compete for agents based upon service and commission levels. Some title insurers currently have greater financial resources, larger distribution networks and more extensive computerized databases of property records and related information than the Company.

In addition, there are numerous industry-related regulations and statutes that set out conditions and requirements to conduct business. Changes to or the removal of such regulations and statutes could result in additional competition from alternative title insurance products or new entrants into the industry that could materially affect the Company’s business operations and financial condition.

Exchange Services

Competition for ITEC and ITAC comes from other title insurance companies and agents, banks, attorneys, and other independently-owned qualified intermediaries that offer exchange services. Key elements that affect competition are price, expertise, timeliness and quality of service and the financial strength and size of the company. Exchange services are not a regulated industry; there is no market data available regarding the Company’s market position in this industry.

CUSTOMERS

The Company is not dependent upon any single customer or a few customers, and the loss of any single customer would not have a material adverse effect on the Company.

INVESTMENT POLICIES

The Company and its subsidiaries derive a substantial portion of their income from investments in bonds (municipal and corporate) and equity securities. The Company’s investment policy is designed to maintain a high quality portfolio and maximize income. The Company invests primarily in short-term investments, federal and municipal governmental securities and investment grade debt securities and equity securities. Some state laws impose restrictions upon the types and amounts of investments that can be made by the Company’s insurance subsidiaries. The Company manages its investment portfolio and does not utilize third party investment managers. The securities in the Company’s portfolio are subject to economic conditions and normal market risks.

See Note 3 of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for the major categories of investments, scheduled maturities, amortized cost, market values of investment securities and earnings by category.

ENVIRONMENTAL MATTERS

The title insurance policies ITIC and NE-ITIC currently issue exclude any liability for environmental risks and contamination. Although policies issued prior to 1992 may not specifically exclude such environmental risks, they generally do not provide affirmative coverage for such risks. As a result, the Company has not experienced and does not anticipate that it or its subsidiaries will incur any significant expenses related to environmental claims.

In connection with effecting tax-deferred exchanges of like-kind property, ITEC and ITAC may temporarily hold title to property pursuant to an accommodation titleholder agreement. In such situations, the person or entity for which title is being held must execute an indemnification agreement pursuant to which it agrees to indemnify ITEC or ITAC, as appropriate, for any environmental or other claims which may arise as a result of the arrangement.

EMPLOYEES

The Company has no paid employees. Officers of the Company are full-time paid employees of ITIC. The Company’s subsidiaries had 218 full-time employees and 21 part-time employees as of December 31, 2008. None of the employees are covered by any collective bargaining agreements. Management considers its relationship with its employees to be favorable.

ADDITIONAL INFORMATION

The Company’s internet address is www.invtitle.com , the contents of which are not and shall not be deemed a part of this document or any other Securities and Exchange Commission filing. The Company makes available free of charge through its internet website its annual reports on Form 10-K, its quarterly reports on Form 10-Q, its current reports on Form 8-K, and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”), and also makes available the Section 16 reports on Forms 3, 4 and 5 of its insiders no later than the end of the business day following such filings. The information is free of charge and may be reviewed and downloaded from the website at any time. The public may read any material it has filed with the SEC at the SEC’s Public Reference Room at 100 F. Street, N.E., Washington, D.C. 20549. The Investors section of the Company’s website also includes its code of business conduct and ethics and the charters of the Audit, Compensation and Nominating Committees of its Board of Directors.

ITEM 1A. RISK FACTORS

The risk factors listed in this section and other factors noted herein could cause actual results to differ materially from those contained in any forward-looking statements.

The Company’s results of operations and financial condition are subject to cyclical demand for title insurance, which depends upon the volume of residential and commercial real estate transactions and mortgage refinancing transactions and economic factors.

The demand for the Company’s title insurance and other real estate transaction products and services varies over time and from year to year and is dependent upon, among other things, the volume of commercial and residential real estate transactions and mortgage refinancing transactions. The volume of these transactions has historically been influenced by factors such as the state of the overall economy, the availability of mortgage financing and mortgage interest rates. During an economic downturn or recession, such as current conditions in the United States, or when the availability of mortgage financing is limited or mortgage interest rates are increasing, real estate activity typically declines. The cyclical nature of the Company’s business has caused fluctuations in revenue and profitability in the past and is expected to do so in the future.

The real estate and credit markets have been experiencing significant volatility and disruption for more than 12 months. The value of residential real estate property and the volume of new and existing home sales have significantly declined since the market peak in 2005. If the current levels of real estate and credit market disruption and volatility continue or worsen, there can be no assurance that the Company will not experience adverse effects, which may be material, to its results of operations.

The overall demand for title insurance also depends in part upon the requirement by mortgage lenders and participants in the secondary mortgage market that title insurance policies be obtained on residential and commercial real property.

The Company may experience material losses resulting from fraud, defalcation or misconduct.

Fraud, defalcation, regulatory noncompliance and other misconduct by the Company’s agents, approved attorneys and employees are risks inherent in the Company’s business. Agents and approved attorneys typically handle large sums of money in trust pursuant to the closing of real estate transactions and misappropriation of funds by any of these parties could result in large title claims.

The Company has recently experienced an increase in its level of fraud-related losses. If current economic conditions remain poor or deteriorate further, the Company may continue to experience increases in the incidence of fraud, defalcation and misconduct, which may have a material adverse effect on it.

Differences between actual claims experience and underwriting and reserving assumptions may adversely affect the Company’s financial results.

The Company’s net income is affected by the extent to which its actual claims experience is consistent with the assumptions used in establishing reserves for claims. Reserves for claims are established based on actuarial estimates of how much the Company will need to pay for reported as well as incurred, but not yet reported claims. In addition, management considers factors such as the Company’s historical claims experience, case reserve estimates on reported claims, large claims and other relevant factors in determining loss provision rates and the aggregate recorded expected liability for claims. Due to the nature of the underlying risks and the high degree of uncertainty associated with the determination of reserves for claims, the Company cannot determine precisely the amounts which it will ultimately pay to settle its claims. Such amounts may vary from the estimated amounts, particularly when those payments may not occur until well into the future. To the extent that actual claims experience is less favorable than the underlying assumptions used in establishing such liabilities, the Company could be required to increase reserves. Title claims can often be complex, vary greatly in dollar amounts and are affected by economic and market conditions and may involve uncertainties as to ultimate exposure, and therefore, reserve estimates are subject to variability. In addition, the Company may experience unexpected large losses periodically which require it to increase its title loss reserves.

Poor economic conditions can lead to increased incidences of title insurance claims, and consequently losses, due to increases in defaults and foreclosures upon insured properties. The Company has experienced an increase in the incidence of title claims and losses during the recent economic downturn. If the current environment continues or deteriorates further, the Company may continue to experience increased levels of claims and losses, which may have a material negative effect on its financial condition and results of operations.

Exposure to mechanic lien claims increases during periods of declining home sales.

The ongoing and significant decline in new home sales has led to an increase in mechanic liens being filed for unpaid construction work. Frequently, these liens do not appear in the public record until significant time has lapsed from when the work was performed. In many jurisdictions, these liens have priority as of the date work commenced, therefore, making it difficult for title insurance companies to underwrite. This “hidden” risk can cause significant increases in claims during periods of declining new home sales. In the recent economic downturn, the Company has experienced increased claims and losses related to this particular risk. Although it has implemented procedures to mitigate against this risk in the future, claims and losses related to this risk under existing policies may continue to increase if current economic conditions continue or deteriorate further.

A decline in the performance of the Company’s investments could materially adversely affect net income and cash flows.

Changes in general economic conditions, interest rates, activities in securities markets and other external factors could adversely affect the value of the Company’s investment portfolio and, in turn, the Company’s operating results and financial condition. Recent declines in the capital markets have adversely affected the Company’s investment portfolio, resulting in declines in the sale value and liquidity of securities.

The Company and its subsidiaries are subject to complex government regulations.

The Company’s title insurance businesses are subject to extensive state laws and regulations by state insurance authorities in each state in which they operate. These laws and regulations are primarily intended for the protection of policyholders and consumers. The nature and extent of these laws and regulations typically involve, among other matters, licensing and renewal requirements and trade and marketing practices, including, but not limited to:

licensing of insurers and agents;
capital and surplus requirements;
approval of premium rates for insurance;
limitations on types and amounts of investments;
restrictions on the size of risks that may be insured by a single company;
deposits of securities for the benefit of policy holders;
filing of annual and other reports with respect to financial condition;
approval of policy forms; and
regulations regarding the use of personal information.

These laws and regulations are subject to change and may restrict the Company’s ability to implement rate increases or other actions that it may want to take to enhance its operating results or have a negative impact on its ability to generate revenue and earnings.

Some of the Company’s other businesses operate within state and federal guidelines. Any changes in the applicable regulatory environment or changes in existing regulations could restrict its existing or future operations. Revenues from the Company’s exchange services segment are closely related to the tax rate on capital gains and other provisions in the Internal Revenue Code. The Company’s revenues in future periods will continue to be subject to these and other factors which are beyond its control.

In addition, the investment management and trust services division is regulated by the North Carolina Commissioner of Banks.

Competition in the Company’s business affects its revenues.

The title insurance industry is highly competitive. Key factors that affect competition in the title insurance business are quality of service, price within regulatory parameters, expertise, timeliness and the financial strength and size of the insurer. Title companies compete for premiums by choosing various distribution channels which may include company-owned operations and issuing agency relationships with attorneys, lenders, realtors, builders and other settlement service providers. Title insurance underwriters compete for agents on the basis of service and commission levels. Some title insurers currently have greater financial resources, larger distribution networks and more extensive computerized databases of property records and information than the Company. The number and size of competing companies varies in the different geographic areas in which the Company operates. Competition among the major providers of title insurance or the acceptance of new alternatives to traditional title products by the marketplace could adversely affect the Company’s operations and financial condition.

The Company’s success relies on its ability to attract and retain key personnel and agents.

Competition for skilled and experienced personnel and agents in the Company’s industry is high. The Company may have difficulty hiring the necessary marketing and management personnel to support any future growth. The loss of any key employee or the failure of any key employee to perform in their current position could prevent the Company from realizing future growth. Also, the Company cannot provide assurance that it will succeed in attracting or retaining new agents. Its results of operations and financial condition could be adversely affected if it is unsuccessful in attracting and retaining agents.

A downgrade or a potential downgrade in one of the Company’s financial strength ratings could result in a loss of business.

The competitive positions of insurance companies rely in part on the independent ratings of their financial strength and claims-paying ability. The Company’s financial strength is subject to continued periodic review by rating agencies. A significant downgrade in the ratings of either of the Company’s policy-issuing subsidiaries could negatively impact its ability to compete for new business and retain existing business and maintain licenses necessary to operate as title insurance companies in various states.

Insurance regulations limit the ability of the Company’s insurance subsidiaries to pay dividends to it.

The Company is an insurance holding company and has no substantial operations of its own. The Company’s ability to pay dividends and meet its obligations is dependent, among other things, on the ability of its subsidiaries to pay dividends or repay funds to it. The Company’s insurance subsidiaries are subject to insurance and other regulations that limit the amount of dividends, loans or advances to it based on the amount of adjusted unassigned surplus and net income and require these subsidiaries to maintain minimum amounts of capital, surplus and reserves. In general, dividends in excess of prescribed limits are deemed “extraordinary” and require prior state insurance regulatory approval. These dividend restrictions could limit the Company’s ability to pay dividends to its shareholders or grow its business. For further discussion of the regulation of dividend payments and other transactions between affiliates, see “Liquidity and Capital Resources” under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this report.

The Company may encounter difficulties managing growth or technology changes, which could adversely affect its results.

The Company has historically achieved revenue growth in part through a combination of developing related new products or services and increasing its market share for existing products. A portion of the Company’s growth may be in services or geographic areas with which management is less familiar than with its core business and geographic areas. The expansion of the Company’s business, particularly in new services or geographic areas, or significant changes in technology may subject it to associated risks, such as the diversion of management’s attention, lack of substantial experience in operating such businesses and a change in competitive position resulting from technology changes.

The Company relies upon North Carolina for about 48% of its title insurance premiums.

North Carolina is the largest source of revenue for the title insurance segment and, in 2008, North Carolina-based premiums accounted for approximately 48% of premiums earned by the Company. A decrease in North Carolina business would negatively impact financial results.

Key accounting and information systems are concentrated in a few locations.

The Company’s corporate headquarters, accounting and technology operations are concentrated in North Carolina. These critical business operations are subject to interruption by natural disasters, fire, power shortages and other events beyond the Company’s control. A catastrophic event that results in the destruction or disruption of any of the Company’s critical business operations or systems could severely affect its ability to conduct normal business operations and, as a result, there could be a material and adverse effect on the Company’s business, operating results and financial condition.

Failures at financial institutions at which the Company deposits funds could adversely affect the Company.

The Company deposits substantial funds in financial institutions. These funds include amounts owned by third parties, such as escrow deposits. Should one or more of the financial institutions at which the Company maintains deposits fail, there is no guarantee that the Company would recover the funds it has deposited, whether through Federal Deposit Insurance Corporation coverage or otherwise.

Certain provisions of the Company’s shareholder rights plan may make a takeover of the Company difficult.

The Company has a shareholders rights plan which could discourage transactions involving actual or potential changes of control, including transactions that otherwise could involve payment of a premium over prevailing market prices to the Company’s shareholders for their common shares.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES

The Company owns two adjacent office buildings and property located on the corner of North Columbia and West Rosemary Streets in Chapel Hill, North Carolina, which serve as the Company’s corporate headquarters. The main building contains approximately 23,000 square feet and has on-site parking facilities. The Company’s principal subsidiary, ITIC, leases office space in 32 locations throughout North Carolina, South Carolina, Michigan and Nebraska. NE-ITIC leases office space in one location in New York. Each of the office facilities occupied by the Company and its subsidiaries are in good condition and adequate for present operations. In November 2005, the Company purchased approximately 7,000 square feet of additional office space in Chapel Hill, North Carolina that was previously leased for ITEC, ITAC, ITIC’s Commercial Services Division and ITIC’s Settlement Services Division.

ITEM 3. LEGAL PROCEEDINGS

The Company and its subsidiaries are involved in various legal proceedings that are incidental to their business. In the Company’s opinion, based on the present status of these proceedings, any potential liability of the Company or its subsidiaries with respect to these legal proceedings will not, in the aggregate, be material to the Company’s consolidated financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2008.

EXECUTIVE OFFICERS OF THE COMPANY

Following is information regarding the executive officers of the Company as of February 28, 2009. Each officer is appointed at the annual meeting of the Board of Directors to serve until the next annual meeting of the Board or until his or her respective successor has been elected and qualified.

Name	Age	Position with Registrant
J. Allen Fine	74	Chief Executive Officer and Chairman of the Board
James A. Fine, Jr.	46	President, Treasurer, Chief Financial Officer, Chief Accounting
		Officer and Director
W. Morris Fine	42	Executive Vice President, Secretary and Director

J. Allen Fine has been Chief Executive Officer and Chairman of the Board of the Company since its incorporation in 1973. Mr. Fine also served as President of the Company until May 1997. Mr. Fine is the father of James A. Fine, Jr., President, Treasurer and Director of the Company, and W. Morris Fine, Executive Vice President, Secretary and Director of the Company.

James A. Fine, Jr. was named Vice President of the Company in 1987. In 1997, he was named President and Treasurer and appointed as a Director of the Company. In 2002, he was appointed as Chief Financial Officer and Chief Accounting Officer. He is the son of J. Allen Fine, Chief Executive Officer and Chairman of the Board of the Company, and the brother of W. Morris Fine, Executive Vice President, Secretary and Director of the Company.

W. Morris Fine was named Vice President of the Company in 1992. In 1993, he was named Treasurer of the Company and served in that capacity until 1997. In 1997, he was named Executive Vice President and Secretary of the Company. In 1999, he was appointed as a Director of the Company. W. Morris Fine is the son of J. Allen Fine, Chief Executive Officer and Chairman of the Board of the Company, and the brother of James A. Fine, Jr., President, Treasurer and Director of the Company.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY; RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock Data

The Common Stock of the Company is traded under the symbol “ITIC” on the NASDAQ Global Market. The number of record holders of common stock at December 31, 2008 was 435. The number of record holders is based upon the actual number of holders registered on the books of the Company at such date and does not include holders of shares in “street names” or persons, partnerships, associations, corporations or other entities identified in security position listings maintained by depository trust companies. The following table shows the high and low sales prices reported on the NASDAQ Global Market.

	2008				2007
	High		Low		High		Low
First Quarter	$	49.25	$	35.75	$	55.73	$	49.13
Second Quarter	$	50.88	$	44.76	$	50.58	$	47.02
Third Quarter	$	49.50	$	39.76	$	50.58	$	37.92
Fourth Quarter	$	41.30	$	28.35	$	42.21	$	35.50

The Company paid cash dividends of $0.07 and $0.06 per share in each of the four quarters in 2008 and 2007, respectively.

The Company’s current dividend policy anticipates the payment of quarterly dividends in the future. The declaration and payment of dividends will be in the discretion of the Board of Directors and will be dependent upon the Company’s future earnings, financial condition and capital requirements. The payment of dividends is subject to the restrictions described in Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Liquidity and Capital Resources.”

The following table provides information about purchases by the Company (and all affiliated purchasers) during the quarter ended December 31, 2008 of equity securities that are registered by the Company pursuant to Section 12 of the Exchange Act:

Issuer Purchases of Equity Securities

				Total Number of	Maximum Number of
	Total Number	Average Price		Shares Purchased as	Shares that May Yet Be
	of Shares	Paid		Part of Publicly	Purchased Under the
Period	Purchased	per S har e		Announced Plan	Plan
Beginning of period					111,244
10/01/08 – 10/31/08	5,826	$	33.05	5,826	105,418
11/01/08 – 11/30/08	532		36.83	532	499,468
12/01/08 – 12/31/08	-		-	-	499,468
Total	6,358	$	33.37	6,358	499,468

For the quarter ended December 31, 2008, the Company purchased an aggregate of 6,358 shares of the Company’s common stock pursuant to the purchase plan (the “Plan”) that was publicly announced on June 5, 2000. On November 10, 2008, the Board of Directors of the Company approved the purchase of an additional 394,582 shares pursuant to the Plan, such that there was authority remaining under the Plan to purchase up to an aggregate of 500,000 shares of the Company’s common stock pursuant to the Plan immediately after this approval. Unless terminated earlier by resolution of the Board of Directors, the Plan will expire when all shares authorized for purchase under the Plan have been purchased. The Company intends to make further purchases under this Plan.

ITEM 6. SELECTED FINANCIAL DATA
(dollars in thousands except per share data)

For the Year	2008		2007		2006		2005		2004
Net premiums written	$	63,662	$	69,984	$	70,196	$	76,522	$	71,843
Revenues		71,123		84,942		84,662		87,864		79,841
Investment income		4,559		5,197		4,326		3,336		2,753
Net (loss) income	$	(1,183)	$	8,402	$	13,185	$	13,293	$	10,719

Per Share Data
Basic (loss) earnings per common share	$	(0.50)	$	3.39	$	5.22	$	5.19	$	4.29
Weighted average shares outstanding—Basic		2,364		2,479		2,528		2,560		2,497
Diluted (loss) earnings per common share	$	(0.50)	$	3.35	$	5.14	$	5.10	$	4.09
Weighted average shares outstanding—Diluted		2,364		2,509		2,564		2,608		2,621
Cash dividends per share	$	.28	$	.24	$	.24	$	.16	$	.15

At Year End
Assets	$	139,858	$	149,642	$	143,516	$	128,472	$	113,187
Investments in securities		115,892		129,026		121,580		95,153		93,261
Stockholders’ equity		89,858		99,276		95,276		84,297		72,507
Book value/share		39.18		41.17		38.00		33.07		29.22

Performance Ratios
Net (loss) income to:
Average stockholders’ equity		(1.25%)		8.64%		14.69%		16.95%		15.80%
Total revenues - (loss) profit margin		(1.66%)		9.89%		15.57%		15.13%		13.43%

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and the related notes in this report.

Overview

Title Insurance: Investors Title Company (the “Company”) is a holding company that engages primarily in two segments of business: title insurance and exchange services. Its primary business activity is the issuance of title insurance through two subsidiaries, Investors Title Insurance Company (“ITIC”) and Northeast Investors Title Insurance Company (“NE-ITIC”), which accounted for 94.3% of the Company’s operating revenues in 2008. Through ITIC and NE-ITIC, the Company underwrites land title insurance for owners and mortgagees as a primary insurer. Title insurance protects against loss or damage resulting from title defects that affect real property.

There are two basic types of title insurance policies - one for the mortgage lender and one for the real estate owner. A lender often requires property owners to purchase title insurance to protect its position as a holder of a mortgage loan, but the lender’s title insurance policy does not protect the property owner. The property owner has to purchase a separate owner’s title insurance policy to protect their investment. When real property is conveyed from one party to another, occasionally there is an undisclosed defect in the title or a mistake or omission in a prior deed, will or mortgage that may give a third party a legal claim against such property. If a claim is made against real property, title insurance provides indemnification against insured defects.

ITIC issues title insurance policies through issuing agencies and also directly through home and branch offices. Issuing agents are typically real estate attorneys or subsidiaries of community and regional mortgage lending institutions, depending on local customs and regulations and the Company’s marketing strategy in a particular territory. The ability to attract and retain issuing agents is a key determinant of the Company’s growth in premiums written.

Revenues for this segment result from purchases of new and existing residential and commercial real estate, refinance activity and certain other types of mortgage lending such as home equity lines of credit.

Volume is a factor in the Company’s profitability due to the existence of fixed operating costs. These expenses will be incurred by the Company regardless of the level of premiums written. The resulting operating leverage has historically tended to amplify the impact of changes in volume on the Company’s profitability. The Company’s profitability also depends, in part, upon its ability to manage its investment portfolio to maximize investment returns and minimize risks such as interest rate changes or defaults or impairments of assets.

The Company’s volume of title insurance premiums is affected by the overall level of residential and commercial real estate activity. In turn, real estate activity is generally affected by a number of factors, including the availability of mortgage credit, the cost of real estate, consumer confidence, employment and family income levels and general United States economic conditions.

Another important factor in the level of residential and commercial real estate activity is the effect of changes in interest rates. According to data published by Freddie Mac, the annual average 30-year fixed mortgage interest rates in the United States were reported to be 6.03%, 6.34% and 6.41% for the years 2008, 2007 and 2006, respectively.

The cyclical nature of the residential and commercial real estate markets – and consequently, the land title insurance industry - has historically caused fluctuations in revenues and profitability, and it is expected to continue to do so in the future. Additionally, there are seasonal influences in real estate activity and accordingly in revenue levels for title insurers.

Exchange Services: The Company’s second business segment provides customer services in connection with tax-deferred real property exchanges through its subsidiaries, Investors Title Exchange Corporation (“ITEC”) and Investors Title Accommodation Corporation (“ITAC”). ITEC serves as a qualified intermediary in like-kind exchanges of real or personal property under Section 1031 of the Internal Revenue Code of 1986, as amended. In its role as qualified intermediary, ITEC coordinates the exchange aspects of the real estate transaction, and its duties include drafting standard exchange documents, holding the exchange funds between the sale of the old property and the purchase of the new property, and accepting the formal identification of the replacement property within

the required identification period. ITAC serves as exchange accommodation titleholder in reverse exchanges. As exchange accommodation titleholder, ITAC offers a vehicle for accommodating a reverse exchange when the taxpayer must acquire replacement property before selling the relinquished property.

Factors that influence the title insurance industry will also generally affect the exchange services industry. In addition, the services provided by the Company’s exchange services segment are pursuant to provisions in the Internal Revenue Code. From time to time, these exchange provisions are subject to review and changes, which may negatively affect the demand for tax-deferred exchanges in general, and consequently the revenues and profitability of the Company’s exchange segment.

Other Services: Other operating business segments not required to be reported separately are reported in a category called All Other. Other services include those offered by the parent holding company and by its wholly owned subsidiaries, Investors Trust Company (“Investors Trust”), Investors Capital Management Company (“ICMC”) and Investors Title Management Services, Inc. (“ITMS”). In conjunction with Investors Trust, ICMC provides investment management and trust services to individuals, companies, banks and trusts. ITMS offers consulting services to clients.

Business Trends and Recent Conditions

The continued downturn in U.S. economic activity and the ongoing decline in real estate transactions were primary drivers behind the lower premiums written in the title industry in 2008.

During the real estate boom, many lenders loosened their underwriting guidelines, particularly in the sub prime loan market. These lower underwriting standards, when combined with new methods of financing loans created a supply of inexpensive credit which led to a build up in mortgage loans to high risk borrowers. As a result, there has been a substantial increase in loan defaults and mortgage foreclosures. Lenders are now returning to stricter loan underwriting standards, which results in lower overall loan volume. This lower loan volume has, in turn, resulted in a lower level of title premiums generated in the marketplace. In addition, the downturn in housing and related mortgage finance industries has contributed to higher claims costs. An increase in property foreclosures tends to reveal title defects. A slowing pace of real estate activity also triggers the likelihood of certain types of title claims, such as mechanics’ liens on newly constructed property. These factors have historically caused title claims to increase in past real estate market cyclical downturns and the Company has experienced such increases during the current downturn.

Historically, activity in real estate markets has varied over the course of market cycles in response to evolving economic factors. The Company anticipates that current market conditions, including the sub prime lending crisis, rising foreclosures, weakening home sales and falling home prices, will be primary influences on the Company’s operations until some stabilization occurs. Operating results can vary from year to year based on cyclical market conditions and do not necessarily indicate the Company’s future operating results and cash flows.

In addition, the credit market disruptions in 2008 resulted in an increase in the Company’s realized capital losses, which are reflected in net income, and unrealized capital losses, which are reflected in accumulated other comprehensive income. The carrying amount, which approximates fair value, of investments at December 31, 2008 and 2007 was approximately $115.9 million and $129.0 million, respectively.

Credit Ratings

ITIC has been rated by two independent Fannie Mae-approved financial analysis firms, Demotech, Inc. and LACE Financial Corporation (“LACE”), with financial stability ratings of A” (A Double Prime) and B, respectively. NE-ITIC’s financial stability also has been recognized by Demotech, Inc. and LACE with ratings of A” (A Double Prime) and A, respectively. According to Demotech, title underwriters earning a Financial Stability Rating of A” (A Double Prime) possess Unsurpassed financial stability related to maintaining positive surplus as regards policyholders, regardless of the severity of a general economic downturn or deterioration in the title insurance cycle. A LACE rating of “A” or “B” indicates that a title insurance company has a strong overall financial condition that will allow it to meet its future claims, and that, generally, the company has good operating earnings, is well-capitalized and has adequate reserves.

Critical Accounting Estimates and Policies

This discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s accompanying Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The Company’s management makes various estimates and judgments when applying policies affecting the preparation of the Consolidated Financial Statements. Actual results could differ from those estimates. Significant accounting policies of the Company are discussed in Note 1 to the accompanying Consolidated Financial Statements. Following are those accounting estimates and policies considered critical to the Company.

Reserves for Claim Losses

The total reserve for all reported and unreported losses the Company incurred through December 31, 2008 is represented by the reserve for claims of $39,238,000 on the accompanying consolidated balance sheet. Of that total, $6,447,345 was reserved for specific claims, and $32,790,655 was reserved for claims for which the Company had no notice. The Company’s reserves for claims are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which may be reported in the future (incurred but not reported, “IBNR”).

In accordance with the requirements of paragraph 17 of Statement of Financial Accounting Standards No. 60, a provision for estimated future claims payments is recorded at the time policy revenue is recorded. The Company records the claims provision as a percentage of premium income. By their nature, title claims can often be complex, vary greatly in dollar amounts, vary in number due to economic and market conditions such as an increase in mortgage foreclosures and involve uncertainties as to ultimate exposure. In addition, some claims may require a number of years to settle and determine the final liability for indemnity and loss adjustment expense. The payment experience may extend for more than twenty years after the issuance of a policy. Events such as fraud, defalcation and multiple property defects can substantially and unexpectedly cause increases in estimates of losses. Due to the length of time over which claim payments are made and regularly occurring changes in underlying economic and market conditions, these estimates are subject to variability.

Management considers factors such as the Company’s historical claims experience, case reserve estimates on reported claims, large claims, actuarial projections and other relevant factors in determining loss provision rates and the aggregate recorded expected liability for claims. In establishing reserves, actuarial projections are compared with recorded reserves to evaluate the adequacy of such recorded claims reserves and any necessary adjustments are then recorded in current operations. As the most recent claims experience develops and new information becomes available, the loss reserve estimate related to prior periods will change to more accurately reflect updated and improved emerging data. The Company reflects any adjustments to reserves in the results of operations in the period in which new information (principally claims experience) becomes available.

The Company initially reserves for each known claim based upon an assessment of specific facts and updates the reserve amount as necessary over the course of administering each claim. Loss ratios for earlier years tend to be more reliable than recent policy years as they are more fully developed. In making loss estimates, management determines a loss provision rate, which it then applies to net premiums written.

There are key assumptions that materially affect the reserve estimates. The Company assumes the aggregate reported liability for known claims and IBNR, in the aggregate, will be comparable to its historical claims experience unless factors, such as loss experience, change significantly. The factors the Company considered for the recently completed fiscal year did not cause any of its key assumptions to change from assumptions used in the immediately preceding period. Also affecting the Company’s assumptions are large losses related to fraud and defalcation, as these can cause significant variances in loss emergence patterns. Management defines a large loss as one where incurred losses exceed $250,000. Due to the small volume of large claims, the long-tail nature of title insurance claims and the inherent uncertainty in loss emergence patterns, large claim activity can vary significantly between policy years. The estimated development of large claims by policy year is therefore subject to significant changes as experience develops. The Company has generally followed the same methodology for estimating loss reserves. The loss provision rate is set to provide for losses on current year policies and to provide for estimated positive or negative development on prior year loss estimates.

Management also considers actuarial analyses in evaluating claims reserves. The actuarial methods used to evaluate reserves are loss development methods, expected loss methods and Cape Cod methods, all of which are accepted actuarial methods for estimating ultimate losses and, therefore, loss reserves. In the loss development method, each policy year’s paid or incurred losses are projected to an “ultimate” level using loss development factors. In the Cape Cod method, expected losses for one policy year are estimated based on the loss results for the other policy years, trended to the level of the policy year being estimated. Expected loss methods produce more stable ultimate loss estimates than do loss development methods, which are more responsive to the current loss data. The Cape Cod method, a special case of the Bornhuetter-Ferguson method, blends the results of the loss development and expected loss methods. For more recent policy years, more weight is given to the results of the expected loss methods; for older policy years, more weight is given to the loss development method results.

The key actuarial assumptions are principally loss development factors and expected loss ratios. The selected loss development factors are based on a combination of the Company’s historical loss experience and title industry loss experience. Expected loss ratios are estimated for each policy year based on the Company’s own experience and title industry loss ratios. When updated data is incorporated into the actuarial models, the resulting loss development factors and expected loss ratios will likely change from the prior values. Changes in these values from 2006 through 2008 have been the result of actual Company and industry experience during the calendar year and not changes in assumptions.

If one or more of the variables or assumptions used changed such that the Company’s recorded loss ratio, or loss provision as a percentage of net title premiums, increased or decreased two loss ratio percentage points, the impact on after-tax income for the year ended December 31, 2008, would be as follows. Company management believes that using a sensitivity of two loss percentage points for the loss ratio provides a reasonable benchmark for analysis of the calendar year loss provision of the Company based on historical loss ratios by year.

Increase in Loss Ratio of two percentage points	$	(840,000	)
Decrease in Loss Ratio of two percentage points	$	840,000

Despite the variability of such estimates, management believes based on historical claims experience and actuarial analysis that the reserves are adequate to cover claim losses resulting from pending and future claims for policies issued through December 31, 2008. The ultimate settlement of policy and contract claims will likely vary from the reserve estimates included in the Company’s consolidated financial statements. The Company continually reviews and adjusts its reserve estimates to reflect its loss experience and any new information that becomes available. There are no known claims that are expected to have a materially adverse effect on the Company’s financial position or operating results.

Premiums Written and Commissions to Agents

Generally, title insurance premiums are recorded and recognized as revenue at the time of closing of the related transaction as the earnings process is then considered complete. Policies or commitments are issued upon receipt of final certificates or preliminary reports with respect to titles. Title insurance commissions earned by the Company’s agents are recognized as expense concurrently with premium recognition.

Valuation and Impairment of Investments in Securities

Securities for which the Company has the intent and ability to hold to maturity are classified as held-to-maturity and are reported at cost, adjusted for amortization of premiums or accretion of discounts and other-than-temporary declines in fair value. Securities held principally for resale in the near term are classified as trading securities and recorded at fair values. Realized and unrealized gains and losses on trading securities are included in other income. Securities not classified as either trading or held-to-maturity are classified as available-for-sale and reported at fair value, adjusted for other-than-temporary declines in fair value, with unrealized gains and losses reported as accumulated other comprehensive income. Securities are regularly reviewed for differences between the cost and estimated fair value of each security for factors that may indicate that a decline in fair value is other-than-temporary. Some factors considered in evaluating whether or not a decline in fair value is other-than-temporary include the duration and extent to which the fair value has been less than cost and the Company’s ability and intent to retain the investment for a period of time sufficient to allow for a recovery in value. These factors are reviewed quarterly and any material degradation in the prospect for recovery will be considered in the other-than-temporary impairment

analysis. Such reviews are inherently uncertain and the value of the investment may not fully recover or may decline in future periods resulting in a realized loss. The fair values of the majority of the Company’s investments are based on quoted market prices from independent pricing services. Over the past several months, the Company has seen credit market disruption as the result of illiquid markets and widening spreads. Auction rate securities, where quoted market prices are not available and the Company relies on discounted cash flow models for valuation purposes, have been particularly affected due to their thinly traded markets. All of the Company’s auction rate securities are rated investment grade and are substantially guaranteed by government-sponsored enterprises. Management believes these values reasonably reflect the fair value of these securities, but the key assumptions do involve qualitative inputs. Realized gains and losses are determined on the specific identification method.

Deferred Tax Asset

The Company recorded net deferred tax assets at December 31, 2008 and 2007 related primarily to reserves for claims, allowance for doubtful accounts and employee benefits. Based upon the Company’s historical results of operations, the existing financial condition of the Company and management’s assessment of all other available information, management believes that it is more likely than not that the benefit of these assets will be realized.

Results of Operations

Operating Revenues

Operating revenues include net premiums written plus other fee income and exchange services segment income. Investment income and realized investment gains and losses are not included in operating revenues and are discussed separately following operating revenues. Following is a summary of the Company’s operating revenues. Intersegment eliminations have been netted with each segment; therefore, the individual segment amounts will not agree to Note 13 in the accompanying Consolidated Financial Statements.

	2008				2007				2006
Title Insurance	$	65,507,644	94.3	%	$	71,827,793	91.1	%	$	71,733,763	89.9	%
Exchange Services		1,163,569	1.7	%		4,340,062	5.5	%		5,980,027	7.5	%
All Other		2,815,689	4.0	%		2,655,383	3.4	%		2,070,533	2.6	%
	$	69,486,902	100	%	$	78,823,238	100	%	$	79,784,323	100	%

Title Insurance

Net Premiums: Net premiums written decreased 9.0% in 2008 from 2007 and decreased 0.3% in 2007 from 2006. During 2008, the decrease was primarily due to the weak housing market and ongoing general declines in real estate activity and volatility and disruption of financial markets.

Policies and Commitments: The volume of business decreased in 2008, as 200,791 policies and commitments were issued in 2008, which is a decrease of 12.4% compared with 229,329 policies and commitments issued in 2007. In 2007, policies and commitments issued declined 7.7% compared with 248,341 policies and commitments issued in 2006.

Following is a breakdown between branch and agency premiums for the years ended December 31:

	Twelve Months Ended December, 31
	2008		%	2007		%	2006		%
Branch	$	24,312,013	38	$	30,144,691	43	$	32,396,798	46
Agency		39,350,174	62		39,839,298	57		37,799,669	54
Total	$	63,662,187	100	$	69,983,989	100	$	70,196,467	100

Title insurance premiums decreased 9.0% to $63,662,187 in 2008 compared with 2007. The decrease in 2008 was made up of a $5,832,678 decrease in branch premiums and a $489,124 decrease in premiums from agency operations.

Branch Office Net Premiums: Branch office net premiums written as a percentage of total net premiums written were 38.2%, 43.1%, and 46.1% in 2008, 2007 and 2006, respectively. The decreases since 2006 are due to an expansion of the Company’s agency relationships. Net premiums written from branch operations decreased 19.3%

in 2008 compared with 2007 and 7.0% in 2007 compared with 2006. The decrease in 2008 reflects the economic downturn. Of the Company’s 29 branch locations that underwrite title insurance policies, 27 are located in North Carolina, and as a result, branch premiums written primarily represent North Carolina business.

Agency Net Premiums: Agency net premiums written as a percentage of total net premiums written were 61.8%, 56.9% and 53.9% in 2008, 2007 and 2006, respectively. Net premiums written from agency operations slightly decreased 1.2% in 2008 compared with 2007 and increased 5.4% in 2007 compared with 2006. The increase in 2007 is primarily due to additional business written by the Company’s agencies. The decrease in agency net premiums written in 2008 can be attributed to the general slowdown in real estate activity, offset by increasing agency relationships.

Following is a schedule of net premiums written in all states where the Company’s two insurance subsidiaries ITIC and NE-ITIC currently underwrite title insurance:

State	2008		2007		2006
Illinois	$	2,140,440	$	1,653,518	$	1,115,890
Kentucky		2,957,744		2,563,039		2,292,194
Michigan		3,326,904		3,073,006		3,488,984
New York		2,106,033		2,412,625		2,436,563
North Carolina		30,527,923		34,544,366		35,200,769
Pennsylvania		1,762,444		1,512,745		1,472,615
South Carolina		7,556,153		7,637,330		7,177,871
Tennessee		2,063,411		2,599,686		2,466,956
Virginia		5,789,337		6,121,746		6,734,698
West Virginia		2,077,603		2,029,885		2,132,330
Other		3,462,391		6,057,404		6,097,021
Direct Premiums		63,770,383		70,205,350		70,615,891
Reinsurance Assumed		166,893		42,816		22,158
Reinsurance Ceded		(275,089)		(264,177)		(441,582)
Net Premiums Written	$	63,662,187	$	69,983,989	$	70,196,467

Exchange Services

Operating revenues from the Company’s two subsidiaries that provide tax-deferred exchange services (ITEC and ITAC) decreased 73.2% from 2007 to 2008 and 27.4% from 2006 to 2007. Demand for tax-deferred exchange services has declined significantly due to weak appreciation or actual declines in value for many types of investment property. The decline in 2008 and 2007 revenues compared with 2006 resulted primarily from decreases in transaction volume and related lower levels of interest-spread income earned on exchange fund deposits held by the Company due to declines in the average balances of deposits held during 2008.

In July 2008, the IRS finalized its proposed regulations regarding treatment of funds held by qualified intermediaries. As originally proposed, these rules would have negatively affected the ability of qualified intermediaries to retain a portion of the interest income earned on exchange fund deposits held by the Company during exchange transactions, which could have had a material adverse effect upon the profitability of the Company’s exchange segment. As adopted however, the new regulations apply only to individual exchange account balances over $2 million. The regulations have only recently been adopted, and therefore the Company has had only limited experience under this new regime; it is possible that these new regulations may have unanticipated consequences on the revenues and profitability of the Company’s exchange services segment.

Other Revenues

Other revenues primarily include investment management fee income, income related to the Company’s equity method investments and agency service fees, as well as search fee and other ancillary fees. Other revenues increased in 2008 and 2007 compared with 2006 primarily due to increases from investment management fee income generated by the Company’s trust division and equity in earnings of unconsolidated affiliates. Other revenues also increased in 2007 compared with 2006 due to increases in search fee income.

Cyclicality and Seasonality

Title Insurance

Title insurance premiums are closely related to the level of real estate activity and the average price of real estate sales. The availability of funds to finance purchases directly affects real estate sales. Home sales and mortgage lending are highly cyclical businesses. Other factors include mortgage interest rates, consumer confidence, economic conditions, supply and demand, and family income levels. Historically, residential real estate activity has been generally slower in the winter because fewer real estate transactions occur, while the spring and summer are more active. Refinance activity is generally less seasonal, but it is subject to interest rate volatility. Fluctuations in mortgage interest rates, as well as other economic factors, can cause shifts in real estate activity outside of the normal seasonal pattern.

Exchange Services

Seasonal factors affecting the level of real estate activity and the volume of title premiums written will also affect the demand for exchange services. Slowing real estate sales led to a decline in average balances of deposits held during the year.

Nonoperating Revenues

Investment income and realized gains and losses from investments are included in nonoperating revenues.

Investment Income

The Company derives a substantial portion of its income from investments in bonds (municipal and corporate) and equity securities. The Company’s title insurance subsidiaries are required by statute to maintain minimum levels of investments in order to protect the interests of policyholders. Bonds totaling approximately $6,540,000 and $6,471,000 at December 31, 2008 and 2007, respectively, are deposited with the insurance departments of the states in which business is conducted. In formulating its investment strategy, the Company has emphasized after-tax income. Investments in marketable securities have increased from Company profits. The investments are primarily in fixed maturity securities and, to a lesser extent, equity securities. The effective maturity of the majority of the fixed income investments is within 15 years.

As new funds become available, they are invested in accordance with the Company’s investment policy and corporate goals. Securities purchased may include a combination of taxable fixed-income securities, tax-exempt securities and equities. The Company strives to maintain a high quality investment portfolio. Interest and investment income levels are primarily a function of general market performance, interest rates and the amount of cash available for investment.

Investment income was $4,558,735 in 2008 compared with $5,197,178 in 2007 and $4,326,335 in 2006. Investment income decreased 12.3% from 2007 to 2008 and increased 20.1% from 2006 to 2007. The decline in investment income in 2008 was due to a decline in the average investment portfolio and lower levels of interest earned on short-term funds, as the capital markets experienced significant distress in the second half of 2008. The increase in 2007 was primarily attributable to increases in the average investment portfolio balance and higher rates of interest earned on short-term investments. See Note 3 in the accompanying Consolidated Financial Statements for the major categories of investments, scheduled maturities, amortized cost, fair values of investment securities and earnings by security category.

Net Realized Gain (Loss) on Investments

The Company’s investment policies have been designed to balance multiple investment goals, including, to assure a stable source of income from interest and dividends, protect capital, provide sufficient liquidity to meet insurance underwriting and other obligations as they become payable in the future and capital appreciation. Dispositions of equity securities at a realized gain or loss reflect such factors as industry sector allocation decisions, ongoing assessments of issuers’ business prospects and tax planning considerations. Additionally, the amount of net realized investment gains and losses are affected by assessments of securities’ valuation for other-than-temporary impairment. As a result of the interaction of these factors and considerations, net realized investment gains or losses can vary significantly from period to period. The Company generally intends to hold securities in unrealized loss positions until they mature or recover. However, the Company does sell securities under certain circumstances, such as when it has evidence of a significant deterioration in the issuer’s creditworthiness.

Net realized loss on investments totaled $2,922,376 in 2008. Net realized gain on the sales of investment securities totaled $921,871 and $551,058 in 2007 and 2006, respectively. The 2008 net loss included impairment charges totaling $1,226,932 on certain equity and fixed income securities in the Company’s portfolio that were deemed to be other than temporarily impaired and net realized losses on sales of investments of $1,695,444. Management has determined that the unrealized losses from remaining fixed income and equity securities at December 31, 2008 are temporary in nature. The net realized gains in 2007 and 2006 resulted primarily from the sale of equity securities and other investments in the Company’s investment portfolio.

The securities in the Company’s portfolio are subject to economic conditions and market risks. The Company considers relevant facts and circumstances in evaluating whether a credit or interest-rate related impairment of a security is other than temporary. Relevant facts and circumstances include the extent and length of time the fair value of an investment has been below cost. Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been below cost, the financial condition and prospects of the issuer (including credit ratings and analyst reports) and macro-economic changes. Reviews of the values of securities are inherently uncertain and the value of the investment may not fully recover, or may decline in future periods resulting in a realized loss.

There are a number of risks and uncertainties inherent in the process of monitoring impairments and determining if an impairment is other than temporary. These risks and uncertainties include the risk that the economic outlook will be worse than expected or have more of an impact on the issuer than anticipated, the risk that the Company’s assessment of an issuer’s ability to meet all of its contractual obligations will change based on changes in the characteristics of that issuer, the risk that information obtained by the Company or changes in other facts and circumstances leads management to change its intent to hold the security to maturity or until it recovers in value and the risk that management is making decisions based on misstated information in the financial statements provided by issuers.

Expenses

The Company’s operating expenses consist primarily of commissions to agents, salaries, employee benefits and payroll taxes, provisions for claims and office occupancy and operations. Operating expenses in 2008 increased 1.7% compared with 2007 and 2007 increased 8.6% compared with 2006 primarily due to increases in the provision for claims. Partially offsetting these increases in 2008 were decreases in professional and contract labor fees, commissions to agents and salaries, employee benefits and payroll taxes. Following is a summary of the Company’s operating expenses. Intersegment eliminations have been netted with each segment; therefore, the individual segment amounts will not agree to Note 13 in the accompanying Consolidated Financial Statements.

	2008				2007				2006
Title Insurance	$	69,226,504	93.1	%	$	68,168,856	93.2	%	$	62,962,703	93.5	%
Exchange Services		1,160,070	1.6	%		1,480,094	2.0	%		1,346,743	2.0	%
All Other		3,953,486	5.3	%		3,469,002	4.8	%		3,022,836	4.5	%
	$	74,340,060	100	%	$	73,117,952	100	%	$	67,332,282	100	%

On a combined basis, loss margin was (1.7%) in 2008 and profit margins were 9.9% and 15.6% in 2007 and 2006, respectively.

Title Insurance

(Loss) Profit Margin: The Company’s title insurance profit margin varies according to a number of factors, including the volume and type of real estate activity. (Loss) profit margins for the title insurance segment were (1.4%), 8.6% and 12.7% in 2008, 2007 and 2006, respectively. The net margins for 2008 and 2007 were primarily affected by the increase in the provision for claims.

Commissions: Agent commissions represent the portion of premiums retained by agents pursuant to the terms of their respective agency contracts. Commissions to agents decreased 2.5% from 2007 to 2008 primarily due to decreased premiums from agency operations in 2008 and increased 6.4% from 2006 to 2007 primarily due to an increasing percentage of premiums originating from agency operations in 2007. Commission expense as a percentage of net premiums written by agents was 70.4%, 71.3% and 70.6% in 2008, 2007 and 2006, respectively. Commission rates vary geographically.

Provisions for Claims: The provision for claims as a percentage of net premiums written was 23.9% in 2008, 14.5% in 2007 and 10.5% in 2006. The change in the loss provision estimate for calendar year 2008 compared with 2007 resulted from unfavorable experience for policy year 2008 primarily due to two large claims related to fraud and one large mechanic’s lien claim totaling in the aggregate approximately $6.8 million. In addition, the Company incurred unfavorable experience during 2008 for claims related to policy year 2006 totaling approximately $1.9 million. Partially offsetting the change in the loss provision estimate for calendar year 2008 was favorable experience for policy year 2007 because of a reduction in large claim activity. The change in estimate for calendar year 2007 compared with 2006 resulted primarily from policy year 2006, which incurred two large claims resulting from mortgage fraud and theft. The additional loss provision as a result of these two claims, in addition to the Company’s expected loss provision, was approximately $2.3 million. The increase in the loss provision in 2008 from the 2007 level resulted in approximately $6.0 million more in reserves than would have been recorded at the lower 2007 level. If material occurrences of mortgage-related fraud, mechanic lien claims and other similar types of claims continue, the Company’s ultimate loss estimates for recent policy years could increase.

Lower than expected loss payment experience was the primary reason for the Company’s loss provision rate in 2006. In 2006, there was favorable experience primarily because of a reduction in large claim activity for policy year 2005. Calendar year 2006 also included an increase for policy year 2006 due to claims activity late in the calendar year. Management considers the loss provision ratios for 2008, 2007 and 2006 to be appropriate given the small volume of large claims, the long-tail nature of title insurance claims and the inherent uncertainty in title insurance loss emergence patterns.

The provision for claims reflects actual payments of claims, net of recovery amounts, plus adjustments to the specific and incurred but not reported claims reserves, the latter of which are actuarially determined based on historical claims experience. Payments of claims, net of recoveries, were $12,943,637, $10,065,719 and $5,356,211 in 2008, 2007 and 2006, respectively.

Reserves for Claims: At December 31, 2008, the total reserves for claims were $39,238,000. Of that total, $6,447,345 was reserved for specific claims, and $32,790,655 was reserved for claims for which the Company had no notice. Because of the uncertainty of future claims, changes in economic conditions, and the fact that many claims do not materialize for several years, reserve estimates are subject to variability. Changes in the expected liability for claims for prior periods reflect the uncertainty of the claim environment, as well as the limited predicting power of historical data. The Company continually updates and refines its reserve estimates as current experience develops and credible data emerges. Adjustments may be required as new information develops which often varies from past experience.

Movements in the reserves related to prior periods were primarily the result of changes to estimates to better reflect the latest reported loss data, rather than as a result of material changes to underlying key actuarial assumptions or methodologies. Such changes include payments on claims closing during the year, new details that emerge on still-open cases that cause claims adjusters to increase or decrease the case reserve and the impact that these types of changes have on the Company’s total loss provision.

Salaries, Employee Benefits and Payroll Taxes: Salaries, employee benefits and payroll taxes were $19,605,500, $20,819,094 and $20,036,079 for 2008, 2007 and 2006, respectively. Salaries and related costs decreased $1.2 million, or 5.8% in 2008 compared with 2007. The decrease in 2008 was primarily due to a decline in bonuses and amounts accrued under employment agreements. The increase in these costs in 2007 was primarily attributable to

salary increases and additional personnel costs related to staff hired by Investors Trust Company. On a consolidated basis, salaries and employee benefits as a percentage of total revenues were 27.6%, 24.5% and 23.7% in 2008, 2007 and 2006, respectively. The increase in salaries and employee benefits as a percentage of total revenues in 2008 was primarily due to declining revenues outpacing cost reductions. The title insurance segment’s total salaries and employee benefits accounted for 83.8%, 84.9% and 85.3% of total salaries for 2008, 2007, and 2006, respectively.

Office Occupancy and Operations: Overall office occupancy and operations as a percentage of total revenues was 7.2%, 6.6% and 6.6% in 2008, 2007 and 2006, respectively. The title insurance segment’s total office occupancy and operations expense accounted for 88.6%, 90.2% and 90.9% in 2008, 2007 and 2006, respectively, of total office occupancy and operations expense.

Premium and Retaliatory Taxes: Title insurance companies are generally not subject to state income or franchise taxes. However, in most states they are subject to premium and retaliatory taxes, as defined by statute. Tax rates and bases vary from state to state. Premium and retaliatory taxes as a percentage of net premiums written were 2.0%, 2.1% and 1.9% for the years ended December 31, 2008, 2007 and 2006, respectively.

Professional and Contract Labor Fees: Professional and contract labor fees for 2008 decreased $1.1 million compared with 2007 primarily due to decreases in contract labor fees incurred, associated with investments in infrastructure and technology in 2007.

Other Expenses: Other operating expenses primarily include miscellaneous operating expenses of the trust division and other miscellaneous expenses of the title segment. These amounts typically fluctuate in relation with transaction volume of the title segment and the trust division.

Exchange Services

The exchange services segment’s total operating expenses as a percentage of the Company’s total expenses were 1.6%, 2.0% and 2.0% for 2008, 2007 and 2006, respectively. The principal operating expenses of this segment are salaries, employee benefits and payroll taxes.

Income Taxes

The benefit for income taxes was $2,034,000 for the year ended December 31, 2008. The income tax benefit in 2008 was a result of reflecting a lower effective tax rate, primarily due to an increase in the proportion of tax-exempt investment income to pre-tax loss. Income tax (benefit) expense as a percentage of (loss) earnings before income taxes was 63.2%, 28.9% and 23.9% for the years ended December 31, 2008, 2007 and 2006, respectively.

During the fourth quarter of 2007, management discovered certain understatements in the provision for income taxes in its financial statements in 2006 and the first three quarters of 2007 as a result of certain taxable municipal bonds that had been previously misclassified as tax-exempt by the Company’s custodian bank. The additional amount of the increase in income taxes in the fourth quarter related to the misclassification was approximately $425,000 related to the 2006 tax year and approximately $325,000 related to the first three quarters of 2007.

The Company monitors the realizability of recognized, impairment and unrecognized losses recorded through December 31, 2008. The Company believes it is more likely than not that the tax benefits associated with those losses will be realized. However, this determination is a judgment and could be impacted by further market fluctuations. Information regarding the components of the income tax expense and items included in the reconciliation of the effective rate with the federal statutory rate can be found in Note 8 to the accompanying Consolidated Financial Statements.

Net (Loss) Income

The Company reported net loss for 2008 of $1,182,799, or $0.50 per share on a diluted basis. The Company reported net income for 2007 of $8,402,335, or $3.35 per share on a diluted basis, compared to $13,185,434, or $5.14 per share on a diluted basis, for 2006.

Liquidity and Capital Resources

Liquidity: Although cash flow generated from operating activities declined from 2007 to 2008, primarily due to the decrease in net income between periods, cash and cash equivalents at year end increased 72% to approximately $5.2 million, due mainly to significant cash provided by investing activities for 2008. The net increase in cash provided by investing activities for 2008 was, in turn, due primarily to significantly reduced purchases of investment securities. The Company’s ability to offset reductions in cash provided by operations by reducing securities investments, however, is limited by the need to maintain adequate financial condition, capital and claims-paying ability.

Due to the Company’s historical consistent ability to generate positive cash flows from its consolidated operations and investment income, management believes that funds generated from operations will enable the Company to adequately meet its current operating needs for the foreseeable future. However, there can be no assurance that future experience will be similar to historic experience, since they are influenced by such factors as the interest rate environment, the Company’s claims-paying ability and its financial strength ratings. The Company is unaware of any trend that is likely to result in material adverse liquidity changes, but continually assesses its capital allocation strategy. The Company’s cash requirements include general operating expenses, income taxes, capital expenditures, dividends on its common stock declared by the Board of Directors and share repurchases. In addition to operational liquidity, the Company maintains a high degree of liquidity within its investment portfolio in the form of short-term investments and other readily marketable securities.

The majority of the Company’s investment portfolio is considered as available-for-sale. The Company reviews the status of each of its securities quarterly to determine whether an other-than-temporary impairment has occurred. The Company’s criteria generally includes the degree to which the fair value of a security is less than 80% of its amortized cost and the investment grade of the security, as well as how long the security has been in an unrealized loss position. The Company’s securities that have had an unrealized loss in excess of one year are primarily investment-grade, long-term bonds and equities that the Company has the ability and intent to hold until a recovery of fair value, which may be until maturity for fixed income securities.

Cash Flows: Net cash flows provided by operating activities were $1,309,473, $10,354,960 and $18,554,831 in 2008, 2007 and 2006, respectively. Cash flows from operations have been the primary source of financing for expanding operations, additions to property and equipment, dividends to shareholders, and other requirements. The net decrease in cash flow from operations in 2008 and 2007 was primarily the result of the decrease in net income.

The principal non-operating use of cash and cash equivalents in 2008 was for repurchases of common stock. The principal non-operating uses of cash and cash equivalents for the two-year period ended December 31, 2007 were primarily for additions to the investment portfolio and, to a lesser extent, repurchases of common stock and capital expenditures. The net effect of all activities on total cash and cash equivalents was an increase of $2,154,284 for 2008, and decreases of $457,670 for 2007 and $11,150,049 for 2006. As of December 31, 2008, the Company held cash and cash equivalents of $5,155,046, short-term investments of $15,725,513 and fixed maturities securities of $88,160,181.

As noted previously, the Company’s operating results and cash flows are heavily dependent on the real estate market, particularly in the title insurance segment. The Company’s business has certain fixed costs such as personnel, and changes in the real estate market are monitored closely and operating expenses such as staffing levels are managed and adjusted accordingly. The Company believes that its significant working capital position and management of operating expenses, along with its product diversification efforts will aid its ability to manage cash resources through declines in the real estate market.

Payment of Dividends: The Company believes that all anticipated cash requirements for current operations will be met from internally generated funds, through cash dividends and distributions from subsidiaries and cash generated by investment securities. The Company’s significant sources of funds are dividends and distributions from its subsidiaries. The holding company receives cash from its subsidiaries in the form of dividends and as reimbursements for operating and other administrative expenses. The reimbursements are executed within the guidelines of management agreements between the holding company and its subsidiaries. The Company’s ability to pay dividends and operating expenses is dependent on funds received from the insurance subsidiaries, which are subject to regulation in the states in which they do business. As of December 31, 2008, approximately $55,987,000 of the consolidated stockholders’ equity represented net assets of the Company’s subsidiaries that cannot be transferred in the form of dividends, loans or advances to the parent company under statutory regulations without prior insurance

department approval. These regulations, among other things, require prior regulatory approval of the payment of dividends and other intercompany transfers. The Company believes, however, that amounts available for transfer from the insurance and other subsidiaries are adequate to meet the Company’s operating needs.

Purchase of Company Stock: On November 10, 2008, the Board of Directors of the Company approved the purchase of an additional 394,582 shares pursuant to the Plan, such that there was authority remaining under the Plan to purchase up to an aggregate of 500,000 shares of the Company’s common stock pursuant to the Plan immediately after the approval. Pursuant to this approval, the Company purchased 130,450 shares in the twelve months ended December 31, 2008, 111,437 shares in the twelve months ended December 31, 2007 and 51,949 shares in the twelve months ended December 31, 2006 at an average per share price of $45.78, $41.82 and $43.85, respectively.

Capital Expenditures: During 2009, the Company has plans for various capital improvement projects, including hardware purchases and several software development projects and are anticipated to be funded via cash flows from operations. All material anticipated capital expenditures are subject to periodic review and revision and may vary depending on a number of factors.

Off-Balance Sheet Arrangements and Contractual Obligations

In addition, in administering tax-deferred property exchanges, ITEC serves as a qualified intermediary for exchanges, holding the net sales proceeds from relinquished property to be used for purchase of replacement property. ITAC serves as exchange accommodation titleholder and, through limited liability companies that are wholly owned subsidiaries of ITAC, holds property for exchangers in reverse exchange transactions. Like-kind exchange deposits and reverse exchange property held by the Company for the purpose of completing such transactions totaled $88,124,000 and $115,515,000 as of December 31, 2008 and 2007, respectively. These amounts are not considered assets of the Company for accounting purposes and, therefore, are excluded from the accompanying consolidated balance sheets. Exchange services revenues include earnings on these deposits; therefore, investment income is shown as exchange services revenue, rather than investment income. The Company remains contingently liable to customers for the transfers of property, disbursements of proceeds, and the return on the proceeds at the agreed upon rate.

External assets managed by the Investors Trust Company totaled over $500,000,000 for the years ended December 31, 2008 and 2007. These amounts are not considered assets of the Company and, therefore, are excluded from the accompanying consolidated balance sheets.

It is not the general practice of the Company to enter into off-balance sheet arrangements; nor is it the policy of the Company to issue guarantees to third parties. Off-balance sheet arrangements are generally limited to the future payments under noncancelable operating leases, payments due under various agreements with third party service providers, and unaccrued obligations pursuant to certain executive employment agreements.

The following table summarizes the Company’s future estimated cash payments under existing contractual obligations at December 31, 2008, including payments due by period:

Contractual Obligations			Payments due by period
			Less than 1						More than 5
	Total		year		1 - 3 years		3 - 5 years		years
Operating lease obligations	$	1,376,412	$	710,419	$	607,115	$	58,878	$	-
Reserves for claims		39,238,000		7,613,000		12,275,000		9,625,000		9,725,000
Other obligations		588,775		438,300		150,475		-		-
Obligations under executive
employment plans and agreements		6,574,000		2,455,701		-		-		4,118,299
FIN48 Liability		86,502		87,646		(1,144)		-		-
Total	$	47,863,689	$	11,305,066	$	13,031,446	$	9,683,878	$	13,843,299

As of December 31, 2008, the Company had a claims reserve of $39,238,000. The amounts and timing of these obligations are estimated and are not set contractually. Nonetheless, based on historical insurance claim experience, the Company anticipates the above payment patterns.

Recent Accounting Standards

In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 amends Accounting Research Bulletin No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. The Company is currently evaluating the effect of adopting this new Statement and anticipates that the Statement will not have a significant impact on the reporting of the Company’s results of operations.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). This Statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in accordance with GAAP. With the issuance of this Statement, the FASB concluded that the GAAP hierarchy should be directed toward the entity and not its auditor, and reside in the accounting literature established by the FASB. This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to Audit Standards AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company is currently evaluating the effect of adopting this new Statement and anticipates that the Statement will not have a significant impact on the reporting of the Company’s results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the context of Item 7A, market risk refers to the risk of loss arising from adverse changes in financial instrument market rates and prices, such as fluctuations in interest rates and prices. The Company’s primary exposure to market risk relates to the impact of adverse changes in the fair value of financial instruments as a result of changes in interest rates and equity market prices of its investment portfolio. Increases in interest rates diminish the value of fixed income securities and preferred stock, and decreases in stock market values diminish the value of common stocks held. The fair value of the majority of marketable securities is determined based on quoted market prices for those securities.

Corporate Oversight

The Company generates substantial investable funds from its two insurance subsidiaries. In formulating and implementing policies for investing new and existing funds, the Company has emphasized maximizing total after-tax return on capital and earnings while ensuring the safety of funds under management and adequate liquidity. The Company’s Board of Directors oversees investment risk management processes. The Company seeks to invest premiums and other income to create future cash flows that will fund future claims, employee benefits and expenses, and earn stable margins across a wide variety of interest rate and economic scenarios. The Board of Directors has established specific investment policies that define the overall framework for managing market and other investment risks, including the accountabilities and controls over these activities. The Company may rebalance its existing asset portfolios or change the character of future investments from time to time to manage its exposure to market risk within defined tolerance ranges. The Company also discusses risk management in various places throughout this Annual Report on Form 10-K, including in Item 7.

Interest Rate Risk

Interest rate risk is the risk that the Company will incur economic losses due to adverse changes in interest rates. This risk arises from the Company’s investments in interest-sensitive debt securities. These securities are primarily fixed rate municipal bonds and corporate bonds. The Company does not purchase such securities for trading purposes. At December 31, 2008, the Company had approximately $76 million in fixed rate bonds. The Company manages the interest rate risk inherent in its assets by monitoring its liquidity needs and by targeting a specific range for the portfolio’s duration or weighted-average maturity.

To determine the potential effect of interest rate risk on interest-sensitive assets, the Company calculates the effect of a 10% change in prevailing interest rates (“rate shock”) on the fair market value of these securities considering stated interest rates and time to maturity. Based upon the information and assumptions the Company uses in its calculation, management estimates that a 10% immediate, parallel increase in prevailing interest rates would decrease the net fair market value of its fixed rate debt securities by approximately $1.6 million. The selection of a 10% immediate parallel increase in prevailing interest rates should not be construed as a prediction by the Company’s management of future market events, but rather, to illustrate the potential impact of such an event. To the extent that actual results differ from the assumptions utilized, the Company’s rate shock measures could be significantly impacted. Additionally, the Company’s calculation assumes that the current relationship between short-term and long-term interest rates (the term structure of interest rates) will remain constant over time. As a result, these calculations may not fully capture the impact of nonparallel changes in the term structure of interest rates and/or large changes in interest rates.

Equity Price Risk

The Company also holds investments in marketable equity securities, which exposes it to market volatility, as discussed in Note 3 to the accompanying consolidated financial statements. The sensitivity analysis presented does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions the Company may take to mitigate its exposure. Equity price risk is the risk that the Company will incur economic losses due to adverse changes in a particular common stock or stock index. At December 31, 2008, the Company had approximately $9.5 million in common stocks. Equity price risk is addressed in part by varying the specific allocation of equity investments over time pursuant to management’s assessment of market and business conditions and ongoing liquidity needs analysis. The Company’s largest equity exposure is a decline in the S&P 500; its portfolio of equity instruments is similar to those that comprise this index. Based upon the information and assumptions the Company used in its calculation, management estimates that an immediate decrease in the S&P 500 of 10% would decrease the net fair value of the Company’s assets identified above by approximately $950,000.

The selection of a 10% immediate decrease in the S&P 500 should not be construed as a prediction by the Company’s management of future market events, but rather, to illustrate the potential impact of such an event. The Company’s exposure will change as a result of changes in its mix of common stocks. Since this calculation is based on historical performance, projecting future price volatility using this method involves an inherent assumption that historical volatility and correlation relationships will remain stable. Therefore, the results noted above may not reflect the Company’s actual experience if future volatility and correlation relationships differ from such historical relationships.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

1.	Report of Independent Registered Public Accounting Firm	32
2.	Management’s Report on Internal Control Over Financial Reporting	33
3.	Report of Independent Registered Public Accounting
	Firm on Internal Control Over Financial Reporting	34
4.	Consolidated Balance Sheets	35
5.	Consolidated Statements of Income (Loss)	36
6.	Consolidated Statements of Stockholders’ Equity	37
7.	Consolidated Statements of Comprehensive Income (Loss)	38
8.	Consolidated Statements of Cash Flows	39
9.	Notes to Consolidated Financial Statements	41

The financial statements schedules meeting the requirements of Regulation S-X are attached hereto as Schedules I, II, III, IV and V.

Selected Quarterly Financial Data

2008	March 31		June 30		September 30		De cember 31
Net premiums written	$	17,813,360	$	18,127,982	$	15,331,820	$	12,389,025
Net income (loss)		2,124,380		(273,934)		917,033		(3,950,275)
Basic earnings (loss) per common share		.88		(.11)		.39		(1.72)
Diluted earnings (loss) per common share		.87		(.11)		.39		(1.72)

2007	March 31		June 30		September 30		De cember 31
Net premiums written	$	16,792,542	$	18,626,179	$	18,994,453	$	15,570,815
Net income		2,322,214		1,154,149		3,857,892		1,068,080
Basic earnings per common share		.93		.46		1.56		.44
Diluted earnings per common share		.92		.46		1.54		.43

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
Investors Title Company
Chapel Hill, North Carolina

We have audited the accompanying consolidated balance sheets of Investors Title Company and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Investors Title Company and Subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Investors Title Company’s internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 6, 2009 expressed an unqualified opinion.

March 6, 2009
High Point, North Carolina

Management’s Report on Internal Control over Financial Reporting

Management of Investors Title Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f) and 15(d)-15-(f). The Company’s internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of published financial statements in accordance with generally accepted accounting principles.

The Company’s internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting based on the framework in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and concluded that internal controls over financial reporting are effective as of December 31, 2008.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 has been audited by Dixon Hughes PLLC as independent registered public accounting firm, as stated in their report which follows.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Investors Title Company
Chapel Hill, North Carolina

We have audited Investors Title Company and Subsidiaries’ (“the Company”) internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Investors Title Company and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Investors Title Company and Subsidiaries as of December 31, 2008 and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity, and cash flows for the year then ended and our report dated March 6, 2009, expressed an unqualified opinion on those consolidated financial statements.

March 6, 2009
High Point, North Carolina

Investors Title Company and Subsidiaries

Consolidated Balance Sheets

As of December 31,	2008		2007
Assets
Investments in securities (Notes 2 and 3):
Fixed maturities
Held-to-maturity, at amortized cost (fair value: 2008: $462,580; 2007: $1,078,229)	$	451,681	$	1,052,535
Available-for-sale, at fair value (amortized cost: 2008: $85,923,583; 2007: $89,228,010)		87,708,500		90,530,946
Equity securities, available-for-sale at fair value (cost: 2008: $9,158,785; 2007: $10,283,458)		9,965,297		14,431,866
Short-term investments		15,725,513		21,222,533
Other investments (Note 16)		2,040,962		1,788,501
Total investments		115,891,953		129,026,381

Cash and cash equivalents (Note 15)		5,155,046		3,000,762
Premium and fees receivable (less allowance for doubtful accounts:
2008: $1,297,000; 2007: $2,170,000) (Note 16)		4,933,797		6,900,968
Accrued interest and dividends		1,225,070		1,254,641
Prepaid expenses and other assets		1,215,146		1,276,806
Property acquired in settlement of claims		395,734		278,476
Property, net (Note 4)		4,422,318		5,278,891
Current income taxes receivable (Note 8)		2,777,829		-
Deferred income taxes, net (Note 8)		3,841,295		2,625,495
Total Assets	$	139,858,188	$	149,642,420

Liabilities and Stockholders’ Equity
Liabilities
Reserves for claims (Note 6)	$	39,238,000	$	36,975,000
Accounts payable and accrued liabilities (Note 10)		10,294,912		11,236,781
Commissions and reinsurance payable (Note 5)		467,388		406,922
Current income taxes payable (Note 8)		-		1,747,877
Total liabilities		50,000,300		50,366,580

Commitments and Contingencies (Notes 5, 9, 10 and 11)
Stockholders’ Equity (Notes 2, 3, 7, 12 and 14)
Class A Junior Participating preferred stock (shares authorized 100,000; no shares issued)		-		-
Common stock-no par value (shares authorized 10,000,000; 2,293,268 and 2,411,318
shares issued and outstanding 2008 and 2007, respectively, excluding 291,676 shares
for 2008 and 2007, respectively of common stock held by the Company’s subsidiary)		1		1
Retained earnings		88,248,452		95,739,827
Accumulated other comprehensive income (net unrealized gain on investments, Note 8;
net unrealized loss on postretirement benefits, Note 10)		1,609,435		3,536,012
Total stockholders’ equity		89,857,888		99,275,840
Total Liabilities and Stockholders’ Equity	$	139,858,188	$	149,642,420

See notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Income (Loss)

For the Years Ended December 31,	2008		2007		2006
Revenues
Underwriting income
Premiums written (Note 5)	$	63,937,276	$	70,248,166	$	70,638,049
Less-premiums for reinsurance ceded (Note 5)		275,089		264,177		441,582
Net premiums written		63,662,187		69,983,989		70,196,467
Investment income-interest and dividends (Note 3)		4,558,735		5,197,178		4,326,335
Net realized (loss) gain on investments (Note 3)		(2,922,376)		921,871		551,058
Exchange services revenue		1,166,141		4,340,062		5,980,027
Other (Note 16)		4,658,574		4,499,187		3,607,829
Total Revenues		71,123,261		84,942,287		84,661,716

Operating Expenses
Commissions to agents		27,717,807		28,424,960		26,714,784
Provision for claims (Note 6)		15,206,637		10,134,719		7,405,211
Salaries, employee benefits and payroll taxes (Notes 7 and 10)		19,605,500		20,819,094		20,036,079
Office occupancy and operations (Note 9)		5,107,843		5,598,576		5,599,382
Business development		2,104,935		2,183,853		2,247,826
Filing fees and taxes, other than payroll and income		587,235		531,777		573,395
Premium and retaliatory taxes		1,281,297		1,496,448		1,348,850
Professional and contract labor fees		1,684,208		2,789,878		2,659,238
Other		1,044,598		1,138,647		747,517
Total Operating Expenses		74,340,060		73,117,952		67,332,282
(Loss) Income before Income Taxes		(3,216,799)		11,824,335		17,329,434
(Benefit) Provision for Income Taxes (Note 8)		(2,034,000)		3,422,000		4,144,000
Net (Loss) Income	$	(1,182,799)	$	8,402,335	$	13,185,434
Basic (Loss) Earnings per Common Share (Note 7)	$	(0.50)	$	3.39	$	5.22
Weighted Average Shares Outstanding – Basic		2,364,361		2,479,321		2,527,927
Diluted (Loss) Earnings per Common Share (Note 7)	$	(0.50)	$	3.35	$	5.14
Weighted Average Shares Outstanding – Diluted		2,364,361		2,508,609		2,564,216
Cash Dividends Paid per Common Share	$	0.28	$	0.24	$	0.24

See notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Stockholders’ Equity

						Accumulated
						Other		Total
	Common Stock			Retained		Comprehensive		Stockholders’
For the Years Ended December 31, 2006, 2007 and 2008	Shares	Amount		Earnings		Income		Equity
Balance, January 1, 2006	2,549,434	$	1	$	81,477,022	$	2,820,233	$	84,297,256
Net income					13,185,434				13,185,434
Dividends ($.24 per share)					(606,423)				(606,423)
Shares of common stock repurchased	(500)				(22,445)				(22,445)
Shares of common stock repurchased and retired	(51,449)				(2,255,735)				(2,255,735)
Issuance of common stock in payment of bonuses and fees	500				21,826				21,826
Stock options exercised	9,340				219,342				219,342
Share-based compensation expense					91,209				91,209
Change in investment accounting method					24,378				24,378
Adjustment to initially apply FASB Statement No. 158,
net of tax							(40,810)		(40,810)
Net unrealized gain on investments							361,631		361,631
Balance, December 31, 2006	2,507,325	$	1	$	92,134,608	$	3,141,054	$	95,275,663
Net income					8,402,335				8,402,335
Dividends ($.24 per share)					(595,808)				(595,808)
Shares of common stock repurchased and retired	(111,437)				(4,660,259)				(4,660,259)
Issuance of common stock in payment of bonuses and fees	40				1,998				1,998
Stock options exercised	15,390				365,284				365,284
Share-based compensation expense					91,669				91,669
Amortization related to FASB Statement No. 158							11,736		11,736
Accumulated post-retirement benefit obligation adjustment							(31,734)		(31,734)
Net unrealized gain on investments							414,956		414,956
Balance, December 31, 2007	2,411,318	$	1	$	95,739,827	$	3,536,012	$	99,275,840
Net loss					(1,182,799)				(1,182,799)
Dividends ($.28 per share)					(661,862)				(661,862)
Shares of common stock repurchased and retired	(130,450)				(5,972,043)				(5,972,043)
Issuance of common stock in payment of bonuses and fees	40				1,946				1,946
Stock options exercised	12,360				230,801				230,801
Share-based compensation expense					92,582				92,582
Amortization related to FASB Statement No. 158							13,456		13,456
Accumulated post retirement benefit obligation adjustment							(67,221)		(67,221)
Net unrealized loss on investments							(1,872,812)		(1,872,812)
Balance, December 31, 2008	2,293,268	$	1	$	88,248,452	$	1,609,435	$	89,857,888

See notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

For the Years Ended December 31,	2008		2007		2006
Net (loss) income	$	(1,182,799)	$	8,402,335	$	13,185,434
Other comprehensive (loss) income, before tax:
Amortization related to prior year service cost		20,388		20,388		-
Amortization of unrecognized gain		-		(2,604)		-
Accumulated post retirement benefit obligation adjustment		(101,850)		(48,082)		-
Unrealized (losses) gains on investments arising during the year		(5,782,291)		1,555,828		1,098,165
Less: reclassification adjustment for losses (gains) realized in net
(loss) income		2,922,376		(921,871)		(551,058)
Other comprehensive (loss) income, before tax		(2,941,377)		603,659		547,107
Income tax benefit related to FASB Statement No. 158		(27,696)		(10,300)		-
Income tax (benefit) expense related to unrealized (losses) gains on
investments arising during the tax year		(1,992,602)		551,029		372,836
Income tax (benefit) expense related to reclassification adjustment for
(losses) gains realized in net (loss) income		1,005,498		(332,028)		(187,360)
Net income tax (benefit) expense on other comprehensive (loss) income		(1,014,800)		208,701		185,476
Other comprehensive (loss) income		(1,926,577)		394,958		361,631
Comprehensive (loss) income	$	(3,109,376)	$	8,797,293	$	13,547,065

See notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31,	2008		2007		2006
Operating Activities
Net (loss) income	$	(1,182,799)	$	8,402,335	$	13,185,434
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Depreciation		920,840		1,183,155		1,146,509
Amortization, net		313,377		274,944		197,972
Amortization related to FASB Statement No. 158		20,388		17,784		-
Issuance of common stock in payment of bonuses and fees		1,946		1,998		21,826
Share-based compensation expense related to stock options		92,582		91,669		91,209
Allowance for doubtful accounts on premiums receivable		(873,000)		42,000		(316,000)
Net loss (gain) on disposals of property		221,148		(15,264)		22,650
Other property transactions		200,000		-		-
Net realized loss (gain) on investments		2,922,376		(921,871)		(551,058)
Net earnings from other investments		(694,570)		(556,082)		(299,982)
Provision for claims		15,206,637		10,134,719		7,405,211
Benefit for deferred income taxes		(201,000)		(304,000)		(232,000)
Changes in assets and liabilities:
Decrease in receivables and other assets		2,761,823		60,509		1,283,662
(Increase) in current income taxes receivable		(2,777,829)		-		-
( Decrease) increase in accounts payable and accrued liabilities		(991,398)		650,707		2,547,774
Increase ( decrease) in commissions and reinsurance payable		60,466		(63,546)		28,370
( Decrease) increase in current income taxes payable		(1,747,877)		1,421,622		(620,535)
Payments of claims, net of recoveries		(12,943,637)		(10,065,719)		(5,356,211)
Net cash provided by operating activities		1,309,473		10,354,960		18,554,831

Investing Activities
Purchases of available-for-sale securities		(17,461,053)		(53,409,065)		(55,092,700)
Purchases of short-term securities		(2,396,338)		(17,073,905)		(1,934,879)
Purchases of other investments		(565,271)		(443,084)		(480,291)
Proceeds from sales and maturities of available-for-sale securities		18,764,347		63,607,086		26,428,538
Proceeds from maturities of held-to-maturity securities		611,000		149,000		461,000
Proceeds from sales and maturities of short-term securities		7,893,358		312,282		4,731,702
Proceeds from sales and distributions of other investments		887,287		1,248,317		749,331
Other investment transactions		-		-		(65,622)
Purchases of property		(493,681)		(463,828)		(1,902,619)
Proceeds from disposals of property		8,266		151,350		42,236
Other property transactions		-		-		23,685
Net cash provided by (used in) investing activities		7,247,915		(5,921,847)		(27,039,619)

Financing Activities
Repurchases of common stock		(5,972,043)		(4,660,259)		(2,278,180)
Exercise of options		230,801		365,284		219,342
Dividends paid		(661,862)		(595,808)		(606,423)
Net cash used in financing activities		(6,403,104)		(4,890,783)		(2,665,261)

Consolidated Statements of Cash Flows, continued
For the Years Ended December 31,	2008		2007		2006
Net Increase (Decrease) in Cash and Cash Equivalents	$	2,154,284	$	(457,670)	$	(11,150,049)
Cash and Cash Equivalents, Beginning of Year		3,000,762		3,458,432		14,608,481
Cash and Cash Equivalents, End of Year	$	5,155,046	$	3,000,762	$	3,458,432
Supplemental Disclosures
Cash Paid During the Year for
Income Taxes (net of refunds)	$	2,775,000	$	2,288,000	$	4,989,000
Non cash net unrealized (gain) loss on investments, net of deferred tax
benefit (provision) of $987,103, ($219,001) and ($185,475) for 2008, 2007 and
2006, respectively	$	1,872,812	$	(414,956)	$	(361,631)
Adjustments to apply FASB Statement No. 158, net of deferred tax
provision of ($34,629), ($16,348) and ($21,024) for 2008, 2007 and
2006, respectively	$	101,850	$	48,082	$	61,834

See notes to the Consolidated Financial Statements.

Investors Title Company and Subsidiaries
Notes to Consolidated Financial Statements

1. Basis of Presentation and Summary of Significant Accounting Policies

Description of Business —Investors Title Company’s (the “Company”) two primary business segments are title insurance and exchange services. The Company’s title insurance segment, through its two subsidiaries, Investors Title Insurance Company (“ITIC”) and Northeast Investors Title Insurance Company (“NE-ITIC”), is licensed to insure titles to residential, institutional, commercial and industrial properties. The Company issues title insurance policies primarily through approved attorneys from underwriting offices and through independent issuing agents in 23 states and the District of Columbia primarily in the eastern half of the United States. The majority of the Company’s business is concentrated in Illinois, Kentucky, Michigan, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia. Investors Title Exchange Corporation (“ITEC”) acts as an intermediary in tax-deferred exchanges of property held for productive use in a trade or business or for investments, while Investors Title Accommodation Corporation (“ITAC”) provides services for accomplishing reverse exchanges when taxpayers decide to acquire replacement property before selling the relinquished property.

Principles of Consolidation and Basis of Presentation —The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Reclassification —Certain 2007 and 2006 amounts in the accompanying consolidated financial statements have been reclassified to conform to the 2008 classifications. These reclassifications had no effect on stockholders’ equity or net income as previously reported.

Significant Accounting Policies —The significant accounting policies of the Company are summarized below.

Cash and Cash Equivalents

For the purpose of presentation in the Company’s statements of cash flows, cash equivalents are highly liquid instruments with original maturities of three months or less. The carrying amount of cash and cash equivalents is a reasonable estimate of fair value due to the short-term maturity of these instruments.

Investments in Securities

Securities for which the Company has the intent and ability to hold to maturity are classified as held-to-maturity and reported at cost, adjusted for amortization of premiums or accretion of discounts, and other-than-temporary declines in fair value. Securities held principally for resale in the near term are classified as trading securities and recorded at fair values. Realized and unrealized gains and losses on trading securities are included in other income. Securities not classified as either trading or held-to-maturity are classified as available-for-sale and reported at fair value, adjusted for other-than-temporary declines in fair value, with unrealized gains and losses, net of tax, reported as accumulated other comprehensive income. Securities are regularly reviewed for differences between the cost and estimated fair value of each security for factors that may indicate that a decline in fair value is other-than-temporary. Some factors considered in evaluating whether or not a decline in fair value is other-than-temporary include the duration and extent to which the fair value has been less than cost and the Company’s ability and intent to retain the investment for a period of time sufficient to allow for a recovery in value. Such reviews are inherently uncertain and the value of the investment may not fully recover or may decline in future periods resulting in a realized loss. Fair values of the majority of investments are based on quoted market prices. Realized gains and losses are determined on the specific identification method. Refer to Note 3.

Short-term Investments

Short-term investments comprise money market accounts which are invested in short-term funds, time deposits with banks and savings and loan associations, and other investments expected to have maturities or redemptions greater than three months and less than twelve months. The Company monitors any events or changes in circumstances that may have a significant adverse effect on the fair value of these investments.

Other Investments

Other investments consist primarily of investments through LLC structures, which are accounted for under the equity or cost method of accounting. The aggregate cost of the Company’s cost method investments totaled $821,617 at December 31, 2008. The Company monitors any events or changes in circumstances that may have had a significant adverse effect on the fair value of these investments and makes any necessary adjustments.

Property Acquired in Settlement of Claims

Property acquired in settlement of claims is held for sale and valued at the lower of cost or market. Adjustments to reported estimated realizable values and realized gains or losses on dispositions are recorded as increases or decreases in claim costs.

Property and Equipment

Property and equipment are recorded at cost and are depreciated principally under the straight-line method over the estimated useful lives (three to twenty-five years) of the respective assets. Maintenance and repairs are charged to operating expenses and improvements are capitalized.

Reserves for Claims

The total reserve for all reported and unreported losses the Company incurred through December 31, 2008 is represented by the reserves for claims. The Company’s reserves for unpaid losses and loss adjustment expenses are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which may be reported in the future. Despite the variability of such estimates, management believes that the reserves are adequate to cover claim losses resulting from pending and future claims for policies issued through December 31, 2008. The Company continually reviews and adjusts its reserve estimates as necessary to reflect its loss experience and any new information that becomes available. Adjustments resulting from such reviews may be significant.

Claims and losses paid are charged to the reserves for claims. Although claims losses are typically paid in cash, occasionally claims are settled by purchasing the interest of the insured or the claimant in the real property. When this event occurs, the acquiring company carries assets at the lower of cost or estimated realizable value, net of any indebtedness on the property.

Income Taxes

The Company makes certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. The Company provides for deferred income taxes (benefits) for the tax consequences on future years on temporary differences between the financial statements’ carrying values and the tax bases of assets and liabilities using currently enacted tax rates. The Company establishes valuation allowances if it believes that it is more likely than not that some or all of its deferred tax assets will not be realized. Refer to Note 8.

Premiums Written and Commissions to Agents

Premiums are generally recorded and recognized as revenue at the time of closing of the related transaction as the earnings process is considered complete. Title insurance commissions earned by the Company’s agents are recognized as expense concurrently with premium recognition.

Exchange Services Revenue

Fees are recognized at the signing of a binding agreement and investment earnings are recognized as they are earned.

Fair Values of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, short-term investments, premiums receivable, accrued interest and dividends, accounts payable, commissions and reinsurance payable and current income taxes payable approximate cost, which is what is reflected on the consolidated balance sheets due to the short-term nature of these assets and liabilities. Fair values for the majority of investment securities are based on quoted market prices. Auction Rate Securities, (“ARS”) are valued using discounted cash flow models to determine the estimated fair value of these investments. Some of the inputs to ARS model are unobservable in the market and are significant.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements,” (“SFAS 157”), which was effective for fiscal years beginning after November 15, 2007 and for interim periods within those years. This Statement defines fair value, establishes a framework for measuring fair value and expands the related disclosure requirements. Relative to SFAS 157, the FASB recently issued Financial Staff Position (“FSP”) 157-1, 157-2 and 157-3. FSP 157-1 amends SFAS 157 to exclude SFAS No. 13, “Accounting for Leases,” and its related interpretive accounting pronouncements that address leasing transactions, while FSP 157-2 delays the effective date of the application of SFAS 157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. FSP 157-3 clarifies the application of SFAS 157 as it relates to the valuation of financial assets in a market that is not active for those financial assets. This FSP is effective immediately and includes those periods for which financial statements have not been issued. The Company adopted SFAS 157 as of January 1, 2008.

Comprehensive Income

The Company’s accumulated other comprehensive income is comprised of unrealized holding gains on available-for-sale securities, net of tax, and unrecognized prior service cost and unrealized gains/losses associated with FASB Statement No. 158 related to postretirement benefit liabilities, net of tax.

Stock-Based Compensation

The Company adopted the provisions of Statement of Financial Accounting Standards No. 123R (“SFAS 123R”) on January 1, 2006, the first day of the Company’s fiscal year 2006, using a modified prospective application, which provides for certain changes to the method for valuing share-based compensation. Under the modified prospective application, prior periods are not revised for comparative purposes. The valuation provisions of SFAS 123R apply to new awards and to awards that are outstanding on the effective date and subsequently modified or cancelled. Estimated compensation expense for awards outstanding at the effective date are recognized over their remaining service period using the compensation cost calculated under FASB Statement No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Under SFAS 123R, share-based compensation cost is generally measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the employee’s requisite service period.

As share-based compensation expense recognized in the consolidated statements of income is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Prior to adopting the provisions of SFAS 123R, the Company recorded estimated compensation expense for employee stock options based upon their intrinsic value on the date of grant pursuant to Accounting Principles Board Opinion No. 25, (“APB 25”), “Accounting for Stock Issued to Employees,” and provided the required pro forma disclosures of SFAS 123. Because the Company established the exercise price based on the fair market value of the Company’s stock at the date of grant, the stock options had no intrinsic value upon grant, and therefore no estimated expense was recorded prior to adopting SFAS 123R. Each accounting period, the Company reported the potential dilutive impact of stock options in its diluted earnings per common share using the treasury-stock method. Out-of-the-money stock options (i.e., the average stock price during the period was below the exercise price of the stock option) were not included in diluted earnings per common share as their effect was anti-dilutive.

Recent Accounting Standards

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin (“ARB”) No. 51” (“SFAS 160”). SFAS 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This Statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent’s equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. It also amends certain of ARB No. 51’s consolidation procedures for consistency with the requirements of SFAS 141(R). SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. The Company is currently evaluating the effect of adopting this new Statement and anticipates that the Statement will not have a significant impact on the reporting of the Company’s results of operations.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). This Statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in accordance with GAAP. With the issuance of this statement, the FASB concluded that the GAAP hierarchy should be directed toward the entity and not its auditor, and, reside in the accounting literature established by the FASB, as opposed to the American Institute of Certified Public Accountants (“AICPA”) Statement on Auditing Standards No. 69, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to Audit Standards AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company is currently evaluating the effect of adopting this new Statement and anticipates that the Statement will not have a significant impact on the reporting of the Company’s results of operations.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period and accompanying notes. Actual results could differ materially from those estimates and assumptions used.

Claims

The Company’s reserves for claims are established using estimated amounts required to settle claims for which notice has been received (reported) and the amount estimated to be required to satisfy incurred claims of policyholders which may be reported in the future (incurred but not reported, “(IBNR)”). In accordance with the requirements of paragraph 17 of Statement of Financial Accounting Standards No. 60, a provision for estimated future claims payments is recorded at the time policy revenue is recorded. The Company records the claims provision as a percentage of premium income. By their nature, title claims can often be complex, vary greatly in dollar amounts, vary in number due to economic and market conditions such as an increase in mortgage foreclosures; and involve uncertainties as to ultimate exposure. In addition, some claims may require a number of years to settle and determine the final liability for indemnity and loss adjustment expense. The payment experience may extend for more than twenty years after the issuance of a policy. Events such as fraud, defalcation and multiple property defects can substantially and unexpectedly cause increases in estimates of losses. Due to the length of time over which claim payments are made and regularly occurring changes in underlying economic and market conditions, these estimates are subject to variability.

available, the loss reserve estimate related to prior periods will change to more accurately reflect updated and improved emerging data. The Company reflects any adjustments to reserves in the results of operations in the period in which new information (principally claims experience) becomes available.

Impairments

The Company considers relevant facts and circumstances in evaluating whether a credit or interest-rate related impairment of a security is other than temporary. Relevant facts and circumstances include the extent and length of time the fair value of an investment has been below cost.

2. Statutory Restrictions on Consolidated Stockholders’ Equity and Investments

The Company has designated approximately $40,638,016 and $39,879,000 of retained earnings as of December 31, 2008 and 2007, respectively, as appropriated to reflect the required statutory premium reserve. See Note 8 for the tax treatment of the statutory premium reserve.

As of December 31, 2008 and 2007 approximately $55,987,000 and $63,219,000, respectively, of consolidated stockholders’ equity represents net assets of the Company’s subsidiaries that cannot be transferred in the form of dividends, loans or advances to the parent company under statutory regulations without prior insurance department approval.

Bonds totaling approximately $6,540,000 and $6,471,000 at December 31, 2008 and 2007 respectively, are on deposit with the insurance departments of the states in which business is conducted.

3. Investments in Securities

The aggregate fair value, gross unrealized holding gains, gross unrealized holding losses, and amortized cost for securities by major security type at December 31 were as follows:

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
December 31, 2008	Cost		Gains		Losses		Value
Fixed Maturities-
Held-to-maturity, at amortized cost-
Obligations of states and political subdivisions	$	451,681	$	10,899	$	-	$	462,580
Total	$	451,681	$	10,899	$	-	$	462,580
Fixed Maturities-
Available-for-sale, at fair value:
Obligations of states and political subdivisions	$	72,818,413	$	2,178,686	$	986,503	$	74,010,596
Corporate debt securities		13,105,170		606,001		13,267		13,697,904
Total	$	85,923,583	$	2,784,687	$	999,770	$	87,708,500
Equity Securities, available-for-sale at fair value-
Common stocks and nonredeemable preferred stocks	$	9,158,785	$	1,446,389	$	639,877	$	9,965,297
Total	$	9,158,785	$	1,446,389	$	639,877	$	9,965,297
Short-term investments-
Certificates of deposit and other	$	15,725,513	$	-	$	-	$	15,725,513
Total	$	15,725,513	$	-	$	-	$	15,725,513

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
December 31, 2007	Cost		Gains		Losses		Value
Fixed Maturities-
Held-to-maturity, at amortized cost-
Obligations of states and political subdivisions	$	1,052,535	$	25,694	$	-	$	1,078,229
Total	$	1,052,535	$	25,694	$	-	$	1,078,229
Fixed Maturities-
Available-for-sale, at fair value:
Obligations of states and political subdivisions	$	85,019,914	$	1,158,282	$	38,824	$	86,139,372
Corporate debt securities		4,208,096		183,478		-		4,391,574
Total	$	89,228,010	$	1,341,760	$	38,824	$	90,530,946
Equity Securities, available-for sale at fair value-
Common stocks and nonredeemable preferred stocks	$	10,283,458	$	4,610,111	$	461,703	$	14,431,866
Total	$	10,283,458	$	4,610,111	$	461,703	$	14,431,866
Short-term investments-
Certificates of deposit and other	$	21,222,533	$	-	$	-	$	21,222,533
Total	$	21,222,533	$	-	$	-	$	21,222,533

The scheduled maturities of fixed maturity securities at December 31, 2008 were as follows:

	Available-for-Sale				Held-to-Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	4,956,056	$	4,985,818	$	-	$	-
Due after one year through five years		24,670,000		25,447,610		7,000		7,294
Due five years through ten years		37,521,273		38,916,390		444,681		455,286
Due after ten years		18,776,254		18,358,682		-		-
Total	$	85,923,583	$	87,708,500	$	451,681	$	462,580

Earnings on investments for the years ended December 31 were as follows:

	2008		2007		2006
Fixed maturities	$	3,415,009	$	4,241,522	$	3,784,337
Equity securities		266,860		255,467		254,110
Invested cash and other short-term investments		779,468		643,654		277,006
Miscellaneous interest		97,398		56,535		10,882
Investment income	$	4,558,735	$	5,197,178	$	4,326,335

Gross realized gains and losses on sales of available-for-sale securities for the years ended December 31 are summarized as follows:

		2008	2007			2006
Gross realized gains:
Obligations of states and political subdivisions	$	25,203	$	23,926	$	20,380
Common stocks and nonredeemable preferred stocks		295,992		900,855		611,906
Total		321,195		924,781		632,286
Gross realized losses:
Obligations of states and political subdivisions		(363,633)		-		-
Common stocks and nonredeemable preferred stocks		(2,759,845)		(413,058)		(97,478)
Total		(3,123,478)		(413,058)		(97,478)
Net realized (loss) gain	$	(2,802,283)	$	511,723	$	534,808

Also included in net realized (loss) gain on sales of investments in the Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006 is ($120,093), $410,148 and $16,250, respectively, of gains (losses) from the sale of other investments.

The following table presents the gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous loss position at December 31, 2008 and 2007.

	Less tha n 12 M onths				12 Mon ths or Lo nger				T ot al
December 31, 2008	Fair Value		Unrealized loss		Fair Value		Unreal ized loss		Fair Value		Unrealized loss
Obligations of states and
political subdivisions	$	15,380,629	$	(984,180)	$	777,257	$	(15,590)	$	16,157,886	$	(999,770)
Total Fixed Maturity
Securities	$	15,380,629	$	(984,180)	$	777,257	$	(15,590)	$	16,157,886	$	(999,770)
Equity Securities		3,002,004		(559,410)		337,970		(80,467)		3,339,974		(639,877)
Total temporarily
impaired securities	$	18,382,633	$	(1,543,590)	$	1,115,227	$	(96,057)	$	19,497,860	$	(1,639,647)

December 31, 2007
Obligations of states and
political subdivisions	$	5,798,040	$	(20,164)	$	5,460,380	$	(18,660)	$	11,258,420	$	(38,824)
Total Fixed Maturity
Securities	$	5,798,040	$	(20,164)	$	5,460,380	$	(18,660)	$	11,258,420	$	(38,824)
Equity Securities		2,652,452		(425,176)		174,927		(36,527)		2,827,379		(461,703)
Total temporarily
impaired securities	$	8,450,492	$	(445,340)	$	5,635,307	$	(55,187)	$	14,085,799	$	(500,527)

As of December 31, 2008, the Company held $16,157,886 in fixed maturity securities with unrealized losses of $999,770. Due to the disruption in 2008 which reduced liquidity and led to wider spreads, the Company saw an increase in unrealized losses in its securities portfolio. The maturity duration of the debt securities range from less than one to more than ten years. The decline in fair value of the fixed maturity securities can be attributed primarily to changes in market interest rates and changes in spreads over treasury securities. Because the Company has the intent and ability to hold these securities until a recovery of fair value, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired.

The unrealized losses related to holdings of equity securities were caused by market changes that the Company considers to be temporary. Since the Company has the intent and ability to hold these equity securities until a recovery of fair value, the Company does not consider these investments other-than-temporarily impaired at December 31, 2008.

Factors considered in determining whether a loss is temporary include the length of time and extent to which fair value has been below cost, the financial condition and prospects of the issuer (including credit ratings and analyst reports) and macro-economic changes. A total of 67 and 57 securities had unrealized losses at December 31, 2008 and December 31, 2007, respectively. Reviews of the values of securities are inherently uncertain and the value of the investment may not fully recover, or may decline in future periods resulting in a realized loss. During 2008, the Company recorded an other-than-temporary impairment charge in the amount of approximately $1.2 million related to securities.

Valuation Hierarchy . SFAS 157 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs to the valuation methodology are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs to the valuation methodology are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value.

The following table presents, by level, the financial assets carried at fair value measured on a recurring basis as of December 31, 2008. The table does not include cash on hand and also does not include assets which are measured at historical cost or any basis other than fair value.

Available-for-sale securities	Car rying Balance		Level 1		Level 2		Level 3
Fixed maturities	$	87,708,500	$	-	$	80,111,580	$	7,596,920
Equity		9,965,297		9,965,297		-		-
Total	$	97,673,797	$	9,965,297	$	80,111,580	$	7,596,920

The following table presents a reconciliation of the Company’s assets measured at fair value using significant unobservable inputs (Level 3) as defined in SFAS 157 for the year ended December 31, 2008:

Changes in fair value during the year ended December 31, 2008:	Level 3
Beginning balance at January 1, 2008	$	-
Transfers into Level 3		8,087,630
Unrealized loss - included in other comprehensive income		(490,710)
Ending balance at December 31, 2008	$	7,596,920

Valuation Techniques . A financial instrument’s classification within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Equity securities are measured at fair value using quoted active market prices and are classified within Level 1 of the valuation hierarchy. The fair value of fixed maturity investments included in the Level 2 category was based on the market values obtained from pricing services.

The Level 2 category generally includes corporate bonds, agency bonds and municipal bonds. A number of the Company’s investment grade corporate bonds are frequently traded in markets that are not active or use valuation models, which use observable market inputs, in addition to traded prices. Substantially all of these model input assumptions are directly observable in the marketplace or can be derived or supported by observable market data.

The Company’s investments in student loan auction rate securities (“ARS”) are its only Level 3 assets, and were transferred from Level 2 because quoted prices from broker-dealers were unavailable due to the failure of auctions. Valuations using discounted cash flow models were used to determine the estimated fair value of these investments as of December 31, 2008. Some of the inputs to this model are unobservable in the market and are significant.

ARS were structured to provide purchase and sale liquidity through a Dutch auction process. Due to the increasingly stressed and liquidity-constrained environment in money markets, the auction process for ARS began failing in February 2008 as broker-dealers ceased supporting auctions with their own capital. All of the Company’s ARS are rated investment grade, comprised entirely of student loan ARS and are substantially guaranteed by government-sponsored enterprises, and the Company continues to receive interest income.

4. Property and Equipment

Property and equipment and estimated useful lives at December 31 are summarized as follows:

	2008		2007
Land	$	1,107,582	$	1,107,582
Title plant		-		200,000
Office buildings and improvements (25 years)		3,173,432		3,178,632
Furniture, fixtures and equipment (3 to 10 years)		5,476,101		6,129,659
Automobiles (3 years)		667,659		586,297
Total		10,424,774		11,202,170
Less accumulated depreciation		(6,002,456 )		(5,923,279 )
Property and equipment, net	$	4,422,318	$	5,278,891

5. Reinsurance

The Company assumes and cedes reinsurance with other insurance companies in the normal course of business. Premiums assumed and ceded were approximately $167,000 and $275,000, respectively, for 2008, $43,000 and $264,000, respectively, for 2007 and $22,000 and $442,000, respectively, for 2006. Ceded reinsurance is comprised of excess of loss treaties, which protects against losses over certain amounts. The Company remains liable to the insured for claims under ceded insurance policies in the event that the assuming insurance companies are unable to meet their obligations under these contracts. The Company has not paid or recovered any reinsured losses during the three years ended December 31, 2008.

6. Reserves for Claims

Changes in the reserves for claims for the years ended December 31 are summarized as follows based on the year in which the policies were written:

	2008		2007		2006
Balance, beginning of year	$	36,975,000	$	36,906,000	$	34,857,000
Provisions related to:
Current year		15,564,722		9,787,529		9,845,776
Prior years		(358,085 )		347,190		(2,440,565 )
Total provision charged to operations		15,206,637		10,134,719		7,405,211
Claims paid, net of recoveries, related to:
Current year		(5,937,616 )		(624,484 )		(618,965 )
Prior years		(7,006,021 )		(9,441,235 )		(4,737,246 )
Total claims paid, net of recoveries		(12,943,637 )		(10,065,719 )		(5,356,211 )
Balance, end of year	$	39,238,000	$	36,975,000	$	36,906,000

The Company continually refines its reserve estimates as current loss experience develops and credible data emerges. Movements in the reserves related to prior periods were primarily the result of changes to estimates to better reflect the latest reported loss data.

The provision for claims as a percentage of net premiums written was 23.9%, 14.5% and 10.5% in 2008, 2007 and 2006, respectively. The change in estimate for calendar year 2008 resulted primarily from policy year 2008, which incurred three large claims totaling approximately $6,800,000. In addition, the Company incurred unfavorable experience during 2008 for claims related to policy year 2006. The change in estimate for calendar year 2007 resulted primarily from policy year 2006, which incurred two large fraud-related claims. The change in estimate for calendar year 2006 resulted primarily from lower than expected large claims payments for 2005. Due to variances between actual and expected loss payments, loss development is subject to significant variability. A large claim is defined as a claim with incurred losses exceeding $250,000. Due to the small volume of large claims, the long-tail nature of title insurance claims and the inherent uncertainty in loss emergence patterns, large claim activity can vary significantly between policy years. The estimated development of large claims by policy year is therefore subject to significant changes as experience develops.

In management’s opinion, the reserves are adequate to cover claim losses which might result from pending and future claims.

7. Earnings (Loss) Per Share and Stock Options

Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive potential common stock, comprised of shares issuable under the Company’s share-based compensation plans and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents includes the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of a share-based award, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the amount of estimated tax benefits that would be recorded in additional paid-in capital, if any, when the share-based awards are exercised are assumed to be used to repurchase shares in the current period. The incremental dilutive potential common shares, calculated using the treasury stock method were 29,288, and 36,289 for 2007 and 2006, respectively.

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31:

For the Years Ended December 31,	2008		2007		2006
Net (loss) income	$	(1,182,799 )	$	8,402,335	$	13,185,434
Weighted average common shares outstanding - Basic		2,364,361		2,479,321		2,527,927
Incremental shares outstanding assuming
the exercise of dilutive stock options and SARS (share settled)		-		29,288		36,289
Weighted average common shares outstanding - Diluted		2,364,361		2,508,609		2,564,216
Basic earnings per common share	$	(0.50 )	$	3.39	$	5.22
Diluted earnings per common share	$	(0.50 )	$	3.35	$	5.14

Due to a net loss in 2008, the treasury stock method for the calculation of diluted shares is not appropriate. In 2007, 3,000 Stock Appreciation Rights (“SARS”) were excluded from the computation of diluted earnings per share because their exercise price was greater than the stock price and therefore considered anti-dilutive. All outstanding options and SARS during 2006 were included in the computation of diluted earnings per share because the options’ exercise prices were less than or equal to the average market price of the common shares.

The Company has adopted Employee Stock Option Purchase Plans (the “Plans”) under which options or SARS to purchase shares (not to exceed 500,000 shares) of the Company’s stock may be granted to key employees or directors of the Company at a price not less than the market value on the date of grant. SARS and options, which are predominantly incentive stock options, are exercisable and vest immediately or within one year or at 10% to 20% per year beginning on the date of grant and generally expire in five to ten years. All SARS issued to date have been share settled only. There were not any shares issued from SARS exercised in 2008, 2007 or 2006.

A summary of share-based award transactions for all share-based award plans follows:

		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
	of Shares	Pr ice		Term (years)	Value
Outstanding as of January 1, 2006	82,001	$	20.50
SARS granted	3,000		43.78
Options exercised	(9,340 )		17.21
Options cancelled/forfeited/expired	(1,610 )		22.12
Outstanding as of December 31, 2006	74,051	$	21.82	4.34	$	2,338,246
SARS granted	3,000		49.04
Options exercised	(15,390 )		23.74
Options cancelled/forfeited/expired	(1,181 )		17.38
Outstanding as of December 31, 2007	60,480	$	22.77	4.11	$	1,377,390
SARS granted	3,000		47.88
Options exercised	(12,360 )		18.67
Options cancelled/forfeited/expired	(4,050 )		29.96
Outstanding as of December 31, 2008	47,070	$	24.83	3.67	$	666,079

Exercisable as of December 31, 2008	33,475	$	26.29	3.72	$	439,377

Unvested as of December 31, 2008	13,595	$	21.26	3.53	$	226,702

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock at December 31, 2008. In 2006 and 2007, there were no options or SARS excluded from the calculation as all options and SARS were in the money. The intrinsic value of options exercised during 2008 was approximately $327,000.

The following tables summarize information about fixed stock options outstanding at December 31, 2008:

					O ptions Outstanding at Yea r-End				Options Exercisable at Year-En d
						Weighted	Weighted			Weighted
						Average	Average			Average
					Number	Remaining	Exercise		Number	Exercise
Range of Exercise Price s					Outstanding	Contractual Life	Price		Exercisable	Price
$	10.00	-	$	12.00	8,870	1.4	$	11.29	6,155	$	11.19
	13.06	-		15.58	5,350	2.2		14.93	3,750		14.90
	17.25	-		19.35	2,150	3.2		18.96	1,100		18.93
	20.00	-		22.75	13,500	3.5		21.24	7,750		20.99
	25.28	-		36.79	9,200	5.5		31.05	7,470		31.05
$	10.00	-	$	36.79	39,070	3.3	$	20.30	26,225	$	20.60

					SARS Outstanding at Year -End				SARS Exer cisable at Year-End
						Weighted	Weighted			Weighted
						Average	Average			Average
					Number	Remaining	Exercise		Number	Exercise
Range of Exercise Prices					Outstanding	Contractual Life	Price		Exercisable	Price
$	43.78	-	$	49.04	8,000	5.4	$	46.96	7,250	$	46.87

In 2008, 9,365 options and SARS vested with a fair value of approximately $91,000.

During the second quarter of 2008, the Company issued 3,000 share settled SARS to the directors of the Company. SARS give the holder the right to receive stock in the appreciation in the value of shares of stock from the grant date for a specified period of time, and as a result, are accounted for as equity instruments. As such, these were valued using the Black-Scholes option valuation model. The fair value of each award is estimated on the date of grant

using the Black-Scholes option valuation model with the weighted-average assumptions noted in the following table. Expected volatilities are based on both the implied and historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of awards represents the period of time that options granted are expected to be outstanding. The interest rate for periods during the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of the grant. The weighted-average fair value for the SARS issued was $12.263 and was estimated using the following weighted-average assumptions:

		2008
	Expected Life in Years	5.0
	Volatility	24.17 %
	Interest Rate	3.09 %
	Yield Rate	0.60 %

The fair value of each SAR granted is estimated on the date of grant using the Black-Scholes option pricing method with the following weighted-average assumptions:

	2008	2007	2006
Expected Life in Years	5.0	5.0	5.0
Volatility	24 %	25 %	27 %
Interest Rate	3.1 %	4.6 %	5.0 %
Yield Rate	0.6 %	0.5 %	0.6 %

There was approximately $93,000 of compensation expense relating to shares vesting on or before December 31, 2008 included in salaries, employee benefits and payroll taxes of the consolidated statements of income (loss). As of December 31, 2008, there was approximately $155,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock awards plans. That cost is expected to be recognized over a weighted-average period of 1.2 years.

The estimated weighted-average grant-date fair value of SARS granted for the years ended December 31 was as follows:

For the Years Ended December 31,	2008		2007		2006
Exercise price equal to market price on date of grant:
Weighted-average market price	$	47.88	$	49.04	$	43.78
Weighted-average grant-date fair value		12.26		14.68		13.96

There are no stock options or SARS granted where the exercise price is less than the market price on the date of grant.

8. Income Taxes

The components of income tax (benefit) expense for the years ended December 31 are summarized as follows:

For the Years Ended December 31,	2008		2007		2006
Current:
Federal	$	(1,857,000 )	$	3,489,000	$	4,042,000
State		24,000		237,000		334,000
Total		(1,833,000 )		3,726,000		4,376,000
Deferred (benefit) expense:
Federal		(147,097 )		(315,518 )		(210,552 )
State		(53,903 )		11,518		(21,448 )
Total		(201,000 )		(304,000 )		(232,000 )
Total	$	(2,034,000 )	$	3,422,000	$	4,144,000

For state income tax purposes, ITIC and NE-ITIC generally pay only a gross premium tax found in premium and retaliatory taxes in the consolidated statements of income (loss).

At December 31, the approximate tax effect of each component of deferred income tax assets and liabilities is summarized as follows:

For the Years Ended December 31,	2008		2007
Deferred income tax assets:
Recorded reserves for claims, net of statutory premium reserves	$	847,755	$	1,209,018
Accrued benefits and retirement services		2,568,958		2,359,699
FASB Statement No. 158		59,022		31,325
Other-than-temporary impairment of assets		428,609		-
Reinsurance and commissions payable		18,263		32,829
Allowance for doubtful accounts		440,980		737,800
Net operating loss carryforward		83,000		64,000
Excess of book over tax depreciation		73,594		10,125
Other		260,205		221,784
Total		4,780,386		4,666,580
Deferred income tax liabilities:
Net unrealized gain on investments		867,044		1,854,147
Discount accretion on tax-exempt obligations		18,984		24,515
Other		53,063		162,423
Total		939,091		2,041,085
Net deferred income tax assets	$	3,841,295	$	2,625,495

At December 31, 2008 and 2007, no valuation allowance was recorded. Based upon the Company’s historical results of operations, the existing financial condition of the Company and management’s assessment of all other available information, management believes that it is more likely than not that the benefit of these net deferred income tax assets will be realized.

A reconciliation of income tax as computed for the years ended December 31 at the U.S. federal statutory income tax rate (34%) to income tax expense follows:

For the Years Ended December 31,	2008		2007		2006
Anticipated income tax (benefit) expense	$	(1,093,712 )	$	4,020,274	$	5,892,008
Increase (reduction) related to:
State income taxes, net of federal income tax benefit		15,840		156,420		220,400
Tax-exempt interest income (net of amortization)		(970,303 )		(1,247,536 )		(2,044,576 )
Misclassified tax-exempt interest related to prior years		-		425,000		-
Other, net		14,175		67,842		76,168
(Benefit) provision for income taxes	$	(2,034,000 )	$	3,422,000	$	4,144,000

During the fourth quarter of 2007, the Company discovered certain understatements in the provision for income taxes in its financial statements in 2006 and the first three quarters of 2007 relating to taxable municipal bonds that had been previously misclassified as tax exempt by the Company’s custodian bank.

The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109,” (“FIN 48”) on January 1, 2007. This interpretation requires that the Company recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on an audit, based on the technical merits of the position. As a result of the implementation of FIN 48, the Company made a comprehensive review of its uncertain tax positions in accordance with recognition standards established by FIN 48. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes.

The amount of unrecognized tax benefit or liability may increase or decrease in the future for various reasons, including adding amounts for current tax year positions, expiration of open income tax returns due to the statute of limitation, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the additions or eliminations of uncertain tax positions.

The Company’s policy is to report interest and penalties related to unrecognized tax benefits or liabilities in the Consolidated Statements of Income. As of December 31, 2008, there was $14,710 related to interest and $10,258 related to penalties recorded in other operating expenses.

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal or state and local examinations by taxing authorities for years before 2005.

The following table sets forth the total amounts of unrecognized tax benefits.

Balance as of January 1, 2008	$	123,605
Additions related to prior years		10,437
Reductions related to prior years		(47,540)
Settlements		-
Balance as of December 31, 2008	$	86,502

In the balance of unrecognized tax benefits at December 31, 2008, approximately $87,000 relates to tax positions and interest for which the statute of limitations will expire within the next 12 months. Of the total unrecognized tax benefits, approximately $62,000 represents the amount that if recognized, would favorably affect the effective tax rate in future periods. Included in the $87,000 are penalties and interest in the amount of approximately $25,000.

9. Leases

The Company leases certain office facilities and equipment under operating leases. Rental expense also includes occasional rental of automobiles. Rent expense totaled approximately $964,000, $930,000 and $889,000 in 2008, 2007 and 2006, respectively. The future minimum lease payments under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2008, are summarized as follows:

Year Ended:
2009	$	710,419
2010		422,292
2011		184,823
2012		58,878
2013		-
Total	$	1,376,412

10. Retirement Agreements and Other Postretirement Benefit Plan

In 2008, the Company adopted a 401(k) savings plan. To participate, individuals must be employed for one full year and work at least 1,000 hours annually. The Company makes a 3% Safe Harbor contribution and also has the option annually to make a discretionary profit share contribution. Individuals may elect to make contributions up to the maximum deductible amount as determined by the Internal Revenue Code. Expenses related to the 401(k) for 2008 were approximately $513,000. Prior to 2008, the company had a Simplified Employee Pension Plan, where after three years of service, employees were eligible to participate. Contributions, which were made at the discretion of the Company, were based on the employee’s salary, but in no case did such contribution exceed $45,000 annually per employee. All contributions were deposited in Individual Retirement Accounts for participants. Contributions expensed under this plan were approximately $878,000, $712,000 for 2007 and 2006, respectively.

In November 2003, ITIC, a wholly owned subsidiary of the Company, entered into employment agreements with the Chief Executive Officer, Chief Financial Officer and the Chief Operating Officer of ITIC. These individuals also serve as the Chief Executive Officer, President and Executive Vice President, respectively, of the Company. The agreements provide compensation and life, health, dental and vision benefits upon the occurrence of specific events, including death, disability, retirement, termination without cause or upon a change in control. The agreements provide for annual salaries to be fixed by the Compensation Committee and, among other benefits, ITIC shall make quarterly contributions pursuant to a supplemental executive retirement account on behalf of each executive equal to 22% of the base salary and bonus paid to each during such quarter through September 30, 2008. The obligation to make contributions to the supplemental executive retirement agreements has expired and has been removed from

the amended and restated employment agreement effective January 1, 2009. The employment agreements also prohibit each of these executives from competing with ITIC and its parent, subsidiaries and affiliates in the state of North Carolina while employed by ITIC and for a period of two years following termination of their employment. In addition, during the second quarter of 2004, ITIC entered into nonqualified deferred compensation plan agreements with these executives. The amount accrued for these agreements at December 31, 2008 and 2007 was approximately $6,574,000 and $5,496,000, respectively, which includes postretirement compensation and health benefits, and was calculated based on the terms of the contract. These executive contracts are accounted for on an individual contract basis. On December 24, 2008, the executive contracts were amended effective January, 1, 2009 to bring them into compliance with Section 409A of the Internal Revenue Code, and to permit a special 2008 distribution election as permitted under Section 409A. The special distribution election provided that each participant may elect, no later than December 31, 2008, to receive a one-time lump sum distribution on January 15, 2009 of all amounts in the participant’s account. Payouts in January 2009 associated with this distribution were approximately $2,456,000. In addition, the nonqualified deferred compensation agreement was amended and restated to terminate all company contributions to this plan beginning January 1, 2009. In connection with such termination, the employment agreements were amended and restated to provide for an annual cash payment to the officers equal to the amounts the Company would have contributed to their accounts under its 401(k) Plan if such contributions were not limited by the federal tax laws, less the amount of any contributions that the Company actually make to their accounts under the Company’s 401(k) Plan.

On November 17, 2003, ITIC entered into employment agreements with key executives that provide for the continuation of certain employee benefits upon retirement. The executive employee benefits include health insurance, dental insurance, vision insurance and life insurance. The plan is unfunded. Estimated future benefit payouts expected to be paid for each of the next five years are $3,226 in 2009, $3,441 in 2010, $3,646 in 2011, $4,530 in 2012, $5,600 in 2013 and $53,481 in the next five years thereafter.

Cost of the Company’s postretirement benefit plan included the following components:

	2008		2007		2006
Net periodic benefit cost
Service cost – benefits earned during the year	$	17,335	$	13,974	$	14,227
Interest cost on projected benefit obligation		19,044		14,646		14,061
Amortization of unrecognized prior service cost		20,388		20,388		20,388
Amortization of unrecognized gains		-		(2,604 )		(1,665 )
Net periodic benefit cost at end of year	$	56,767	$	46,404	$	47,011

Under the disclosure provisions of SFAS 158, the Company is required to recognize the funded status (i.e., the difference between the fair value of the plan assets and the accumulated postretirement benefit obligations of its benefit plan in its consolidated balance sheet, with a corresponding adjustment to accumulated other comprehensive income, net of tax. The net amount in accumulated other comprehensive income is $ 173,594 ($114,573 net of tax) and $92,132 ($60,808 net of tax) for December 31 2008 and 2007, respectively, and represents the net unrecognized actuarial losses and unrecognized prior service costs. The effects of adopting the provisions of SFAS 158 on the Company’s consolidated balance sheets at December 31, 2008 and 2007 are presented in the following table:

	2008		2007
Funded status
Actuarial present value of future benefits:
Fully eligible active employee	$	(41,001 )	$	(34,622 )
Non-eligible active employees		(429,648 )		(297,798 )
Plan assets		-		-
Funded status of accumulated postretirement benefit obligation, recognized in
other liabilities	$	(470,649 )	$	(332,420 )

Development of the accumulated postretirement benefit obligation for the years ended December 31, 2008 and 2007 includes the following:

	2008		2007
Accrued postretirement benefit obligation at beginning of year	$	(240,288 )	$	(193,884 )
Service cost – benefits earned during the year		(17,335 )		(13,974 )
Interest cost on projected benefit obligation		(19,044 )		(14,646 )
Amortization cost, net		(20,388 )		(17,784 )
Unrecognized prior service cost		(93,963 )		(114,351 )
Unrecognized loss (gain)		(79,631 )		22,219
Funded status of accumulated postretirement benefit obligation at end of year	$	(470,649 )	$	(332,420 )

The changes in amounts related to accumulated other comprehensive income, pre-tax, is as follows:

	2008		2007
Balance at beginning of year	$	92,132	$	61,834
Components of Accumulated Other Comprehensive Income
Unrecognized prior service cost		(20,388 )		(20,388 )
Unrecognized gain		101,850		50,686
Balance at end of year	$	173,594	$	92,132

For 2009, the amounts in accumulated other comprehensive income, pre-tax, to be recognized as components of net periodic benefit costs are:

	Projected
	2009
Amortization of unrecognized prior service cost	$	20,388
Amortization of unrecognized loss		2,014
Net periodic benefit cost at end of year	$	22,402

Weighted-average actuarial assumptions used to determine benefit obligations at December 31 were:

Assumed health care cost trend rates do have an effect on the amounts reported for the postretirement benefit plan. The following illustrates the effects on the net periodic postretirement benefit cost and the accumulated postretirement benefit obligation of a one percentage point increase and one percentage point decrease in the assumed health care cost trend rate as of December 31, 2008:

		One-		One-
		Percentage		Percentage
		Point		Point
		In crease		D ecrease
1.	Net periodic postretirement benefit cost
	Effect on the service cost component	$	6,084	$	(4,651 )
	Effect on interest cost		6,328		(4,869 )
	Total effect on the net periodic postretirement benefit cost	$	12,412	$	(9,520 )
2.	Accumulated postretirement benefit obligation (including active
	employees who are not fully eligible)
	Effect on those currently receiving benefits (retirees and spouses)	$	-	$	-
	Effect on active fully eligible		2,896		(2,629 )
	Effect on actives not yet eligible		107,156		(82,044 )
	Total effect on the accumulated postretirement benefit obligation	$	110,052	$	(84,673 )

1 1. Commitments and Contingencies

The Company and its subsidiaries are involved in various routine legal proceedings that are incidental to their business. In the Company’s opinion, based on the present status of these proceedings, any potential liability of the Company or its subsidiaries with respect to these legal proceedings, will not, in the aggregate, be material to the Company’s consolidated financial condition or operations.

Escrows and Like-Kind Exchanges

As a service to its customers, the Company, through ITIC, administers escrow and trust deposits representing earnest money received under real estate contracts, undisbursed amounts received for settlement of mortgage loans and indemnities against specific title risks. Cash held by the Company for these purposes was approximately $14,492,000 and $23,665,000 as of December 31, 2008 and 2007, respectively. In administering tax-deferred property exchanges, the Company’s subsidiary, ITEC, serves as a qualified intermediary for exchanges, holding the net proceeds from sales transactions from relinquished property to be used for purchase of replacement property. Another Company subsidiary, ITAC, serves as exchange accommodation titleholder and, through limited liability companies that are wholly owned subsidiaries of ITAC, holds property for exchangers in reverse exchange transactions. Like-kind exchange deposits and reverse exchange property totaled approximately $88,124,000 and $115,515,000 as of December 31, 2008 and 2007, respectively. These amounts are not considered assets of the Company and, therefore, are excluded from the accompanying consolidated balance sheets. Exchange services revenues include earnings on these deposits; therefore, investment income is shown as exchange services revenue, rather than investment income. The Company remains contingently liable for the disposition of these deposits and for the transfers of property, disbursements of proceeds and the return on the proceeds at the agreed upon rate. These like-kind exchange funds are primarily invested in money market and other short-term investments, including $4.4 million of auction rate securities (“ARS”), at December 31, 2008. At December 31, 2008, ITEC had recorded a liability of approximately $209,000 as a result of impairment of assets specifically related to funds held. The Company does not believe the current illiquidity of these securities will impact its operations, as it believes it has sufficient capital to provide continuous and immediate liquidity as necessary.

12. Statutory Accounting

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America which differ in some respects from statutory accounting practices prescribed or permitted in the preparation of financial statements for submission to insurance regulatory authorities.

Consolidated stockholders’ equity on a statutory basis was $82,305,151 and $93,079,819 as of December 31, 2008 and 2007, respectively. Net (loss) income on a statutory basis was $(3,148,117), $7,980,954 and $11,684,065 for the twelve months ended December 31, 2008, 2007 and 2006.

13. Segment Information

Consistent with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information , ” the Company has aggregated its operating segments into two reportable segments: 1) title insurance services; and 2) tax-deferred exchange services. The remaining immaterial segments have been combined into a group called All Other.

The title insurance segment primarily issues title insurance policies through approved attorneys from underwriting offices and through independent issuing agents. Title insurance policies insure titles to residential, institutional, commercial and industrial properties.

The tax-deferred exchange services segment acts as an intermediary in tax-deferred exchanges of property held for productive use in a trade or business or for investments and serves as exchange accommodation titleholder, holding property for exchangers in reverse exchange transactions. Revenues are derived from fees for handling exchange transactions.

Provided below is selected financial information about the Company’s operations by segment for the three years ended December 31, 2008, 2007 and 2006:

	Title		Exchange		All		Intersegment
2008	Insurance		Services		Other		Elimination		Total
Operating revenues	$	65,507,644	$	1,163,569	$	3,594,694	$	(779,005 )	$	69,486,902
Investment income		3,576,758		37,839		1,025,807		(81,669 )		4,558,735
Net realized loss on investments		(2,661,018 )		-		(261,358 )		-		(2,922,376 )
Total revenues	$	66,423,384	$	1,201,408	$	4,359,143	$	(860,674 )	$	71,123,261
Operating expenses		69,901,591		1,214,363		4,003,111		(779,005 )		74,340,060
(Loss) income before taxes	$	(3,478,207 )	$	(12,955 )	$	356,032	$	(81,669 )	$	(3,216,799 )
Assets	$	102,408,285	$	480,159	$	36,969,744	$	-	$	139,858,188

2007
Operating revenues	$	71,827,793	$	4,340,062	$	3,485,281	$	(829,898 )	$	78,823,238
Investment income		4,024,900		29,501		1,212,779		(70,002 )		5,197,178
Net realized gain on investments		513,252		-		408,619		-		921,871
Total revenues	$	76,365,945	$	4,369,563	$	5,106,679	$	(899,900 )	$	84,942,287
Operating expenses		68,896,939		1,546,437		3,504,474		(829,898 )		73,117,952
Income before taxes	$	7,469,006	$	2,823,126	$	1,602,205	$	(70,002 )	$	11,824,335
Assets	$	111,384,663	$	1,210,438	$	37,047,319	$	-	$	149,642,420

2006
Operating revenues	$	71,733,764	$	5,980,027	$	2,915,065	$	(844,533 )	$	79,784,323
Investment income		3,759,367		18,138		619,231		(70,401 )		4,326,335
Net realized gain on investments		551,058		-		-		-		551,058
Total revenues	$	76,044,189	$	5,998,165	$	3,534,296	$	(914,934 )	$	84,661,716
Operating expenses		63,667,391		1,419,923		3,089,501		(844,533 )		67,332,282
Income before taxes	$	12,376,798	$	4,578,242	$	444,795	$	(70,401 )	$	17,329,434
Assets	$	114,599,621	$	1,087,383	$	27,829,374	$	-	$	143,516,378

For 2008, operating revenues in the Exchange Services Segment includes a loss of $2,572 related to the disposal of assets.

14. Stockholders’ Equity

On November 12, 2002, the Company’s Board of Directors amended the Company’s Articles of Incorporation, creating a series of Class A Junior Participating Preferred Stock (the “Class A Preferred Stock”). There are 1,000,000 shares of Preferred Stock authorized and 100,000 of these shares have been designated Class A Junior Participating Preferred Stock. The Class A Junior Participating Preferred Stock is senior to common stock in dividends or distributions of assets upon liquidations, dissolutions or winding up of the Company. Dividends on the Class A Preferred Stock are cumulative and accrue from the quarterly dividend payment date. Each share of Class A Preferred Stock entitles the holder thereof to 100 votes on all matters submitted to a vote of shareholders of the Company. These shares were reserved for issuance under the Shareholder Rights Plan (the “Plan”), which was adopted on November 21, 2002, by the Company’s Board of Directors. Under the terms of the Plan, the Company’s common stock acquired by a person or a group buying 15% or more of the Company’s common stock would be diluted, except in transactions approved by the Board of Directors.

In connection with the Plan, the Company’s Board of Directors declared a dividend distribution of one right (a “Right”) for each outstanding share of the Company’s common stock paid on December 16, 2002, to shareholders of record at the close of business on December 2, 2002. Each Right entitles the registered holder to purchase from the Company a unit (a “Unit”) consisting of one one-hundredth of a share of Class A Preferred Stock at a purchase price of $80 per Unit. Under the Plan, the Rights detach and become exercisable upon the earlier of (a) ten (10) days following public announcement that a person or group of affiliated or associated persons has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of the Company’s common stock, or (b) ten (10) business days following the commencement of, or first public announcement of the intent of a person or

group to commence, a tender offer or exchange offer that would result in a person or group beneficially owning 15% or more of such outstanding shares of the Company’s common stock. The exercise price, the kind and the number of shares covered by each right are subject to adjustment upon the occurrence of certain events described in the Plan.

If the Company is acquired in a merger or consolidation in which the Company is not the surviving corporation, or the Company engages in a merger or consolidation in which the Company is the surviving corporation and the Company’s common stock is changed or exchanged, or more than 50% of the Company’s assets or earning power is sold or transferred, the Rights entitle a holder (other than the acquiring person or group) to buy, at the exercise price, stock of the acquiring company having a market value equal to twice the exercise price. Following an acquisition by such person or group of 50% or more of the outstanding common stock, the Company’s Board of Directors may exchange the Rights (other than the Rights owned by such person or group), in whole or in part, at an exchange ratio of one share of the Company’s common stock, or one one-hundredth of a share of Preferred Stock, per Right.

The Rights expire on November 11, 2012, and are redeemable upon action by the Board of Directors at a price of $0.01 per right at any time before they become exercisable. Until the Rights become exercisable, they are evidenced only by the common stock certificates and are transferred with and only with such certificates.

15. Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company invests its cash and cash equivalents into high credit quality security instruments. Deposits which exceed $250,000 at each institution are not insured by the Federal Deposit Insurance Corporation. Of the $5.2 million in cash and cash equivalents on the Consolidated Balance Sheets at December 31, 2008, $5.4 million was not insured by the Federal Deposit Insurance Corporation. The total amount not insured is higher than cash and cash equivalents due to larger bank than book balances.

The Company generates a significant amount of title insurance premiums in North Carolina. In 2008, 2007 and 2006, North Carolina accounted for 47.9%, 49.2% and 49.8% of total direct title premiums, respectively.

16. Related Party Transactions

During 2008, the Company repurchased 106,000 shares of common stock at a value of approximately $4,922,000 from a non-employee director and family member of that director. The shares were repurchased in three separate transactions pursuant to the purchase plan that was publicly announced on June 5, 2000. The shares were purchased at the current bid price on the day of each transaction.

The Company has investments in unconsolidated affiliates in limited liability companies that are accounted for under the equity method of accounting. The following table sets forth the approximate values by year found within each financial statement classification:

Financial Statement Classification,
Consolidated Balance Sheets	2008		2007
Other investments	$	1,146,000	$	841,000
Premium and fees receivable		432,000		401,000

Financial Statement Classification,
Consolidated Statements of Income (Loss)	2008		2007		2006
Other income	$	1,175,000	$	953,000	$	633,000

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation was performed by the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2008 for the purpose of providing reasonable assurance that the information required to be disclosed in the reports the Company files or submits under the Securities Exchange Act of 1934 (the “Act”) (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

During the quarter ended December 31, 2008, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Reports of Management and Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting

Management has assessed, and the Company’s independent registered public accounting firm, Dixon Hughes PLLC, has audited, the Company’s internal control over financial reporting as of December 31, 2008. The unqualified reports of management and Dixon Hughes PLLC thereon are included in Item 8 of this Annual Report on Form 10-K and are incorporated by reference herein.

ITEM 9B. OTHER INFORMATION

There was no information required to be disclosed in a report on Form 8-K during the fourth quarter of the year that has not been reported.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information called for by this item is incorporated by reference to the material under the captions “Proposals Requiring Your Vote,” “General Information - Section 16(a) Beneficial Ownership Reporting Compliance,” “Corporate Governance – Board of Directors and Committees – The Audit Committee” and “Corporate Governance – Code of Business Conduct and Ethics” in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 20, 2009. Other information with respect to the executive officers of the Company is included at the end of Part I of this Form 10-K Annual Report under the separate caption “Executive Officers of the Company.”

ITEM 11. EXECUTIVE COMPENSATION

The information called for by this item is set forth under the captions “Executive Compensation,” “Compensation of Directors,” “Corporate Governance – Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in the Company’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 20, 2009 and is incorporated by reference in this Form 10-K Annual Report.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information pertaining to securities ownership of certain beneficial owners and management is set forth under the caption “Stock Ownership of Certain Beneficial Owners and Management” in the Company’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 20, 2009 and is incorporated by reference in this Form 10-K Annual Report.

The following table provides information about the Company’s compensation plans under which equity securities are authorized for issuance as of December 31, 2008. The Company does not have any equity compensation plans that have not been approved by its shareholders.

Equity Compensation Plan Information

Number of Securities

Number of Securities to

Weighted-Average

Remaining Available

be Issued Upon Exercise

Exercise Price of

for Future Issuance

of Outstanding Options,

Outstanding Options,

Under Equity

Plan Category

Warrants and Rights

Warrants and R ights

Compensation Plans

Equity compensation plans approved by

shareholders

47,070

24.83

237,701

Equity compensation plans not approved by

shareholders

Total

47,070

24.83

237,701

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information called for by this item is set forth under the captions “Certain Relationships and Related Transactions” and “Corporate Governance – Independent Directors” set forth in the Company’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 20, 2009 and is incorporated by reference in this Form 10-K Annual Report.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information pertaining to principal accountant fees and services is set forth under the caption “Independent Registered Public Accounting Firm” in the Company’s definitive Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 20, 2009 is incorporated by reference in this Form 10-K Annual Report.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements .

      The following financial statements are filed under Item 8 of this Form 10-K Annual Report:
      Report of Independent Registered Public Accounting Firm
      Management’s Report on Internal Control Over Financial Reporting
      Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
      Consolidated Balance Sheets as of December 31, 2008 and 2007
      Consolidated Statements of Income (Loss) for the Years Ended December 31, 2008, 2007 and 2006
      Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2008, 2007 and 2006
      Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2008, 2007 and 2006
      Consolidated Statements of Cash Flows for the Years Ended December 31, 2008, 2007 and 2006
      Notes to Consolidated Financial Statements

(a)(2) Financial Statement Schedules.

Following is a list of financial statement schedules filed as part of this Form 10-K Annual Report:

Schedule Number		Description
I		Summary of Investments - Other Than Investments in Related Parties
II		Condensed Financial Information of Registrant
III		Supplementary Insurance Information
IV		Reinsurance
V		Valuation and Qualifying Accounts

All other schedules are omitted, as the required information either is not applicable, is not required, or is presented in the consolidated financial statements or the notes thereto.

(a)(3) Exhibits.

The exhibits filed as a part of this report and incorporated herein by reference to other documents are listed in the Index to Exhibits to this Annual Report on Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

INVESTORS TITLE COMPANY
	(Registrant)

By:	/s/ J. Allen Fine
J. Allen Fine, Chairman and Chief Executive
Officer (Principal Executive Officer)

March 9, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 9th day of March, 2009.

/s/ J. Allen Fine		/s/ James R. Morton
J. Allen Fine, Chairman of the Board and Chief		James R. Morton, Director
Executive Officer
(Principal Executive Officer)

/s/ James A. Fine, Jr.		/s/ A. Scott Parker III
James A. Fine, Jr., President, Treasurer and		A. Scott Parker III, Director
Director (Principal Financial Officer and
Principal Accounting Officer)

/s/ W. Morris Fine		/s/ H. Joe King, Jr.
W. Morris Fine, Executive Vice President,		H. Joe King, Jr., Director
Secretary and Director


/s/ David L. Francis		/s/ R. Horace Johnson
David L. Francis, Director		R. Horace Johnson, Director

/s/ Richard M. Hutson, II
Richard M. Hutson, II, Director

SCHEDULE I

INVESTORS TITLE COMPANY AND SUBSIDIARIES
SUMMARY OF INVESTMENTS – OTHER THAN INVESTMENTS IN RELATED PARTIES
AS OF DECEMBER 31, 2008

					Amount at
					which shown in
					the Balance
Type of Investment	Cost (1)		Market Value		Sheet (2)
Fixed Maturities:
Bonds:
States, municipalities & political subs	$	73,270,094	$	74,473,176	$	74,462,277
All other corporate bonds		13,105,170		13,697,904		13,697,904
Short-term investments		15,725,513		15,725,513		15,725,513
Total fixed maturities		102,100,777		103,896,593		103,885,694

Equity Securities:
Common Stocks:
Public utilities		540,630		529,741		529,741
Banks, trust and insurance companies		34,884		86,100		86,100
Industrial, miscellaneous and all other		8,165,246		8,886,081		8,886,081
Nonredeemable preferred stocks		418,025		463,375		463,375
Total equity securities		9,158,785		9,965,297		9,965,297

Other Investments		895,173		895,173		895,173
Total investments per the consolidated balance sheet (3)	$	112,154,735	$	114,757,063	$	114,746,164

	(1)		Fixed maturities are shown at amortized cost and equity securities are shown at original cost
	(2)		Bonds of states, municipalities and political subdivisions are shown at amortized cost for held-to-maturity bonds and fair value for available-for-sale bonds. Equity securities are shown at fair value
	(3)		The above summary of investments does not include investments in related parties accounted for under the equity method of accounting in the amount of $1,145,789.

SCHEDULE II

INVESTORS TITLE COMPANY (PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
BALANCE SHEETS
AS OF DECEMBER 31, 2008 AND 2007

	2008		2007
Assets
Cash and cash equivalents	$	1,476,574	$	207,436
Investments in fixed maturities, available-for-sale		13,975,353		17,707,623
Investments in equity securities, available-for-sale		89,100		250,950
Short-term investments		14,391,860		13,122,076
Investments in affiliated companies		55,363,938		63,628,499
Other investments		470,481		461,835
Other receivables		710,860		291,391
Income taxes receivable		1,054,569		1,255,157
Accrued interest and dividends		218,070		214,068
Property, net		2,914,630		3,038,964
Deferred income taxes, net		243,298		22,288
Total Assets	$	90,908,733	$	100,200,287

Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued liabilities	$	1,050,845	$	924,447
Total liabilities		1,050,845		924,447

Stockholders’ Equity:
Class A Junior Participating preferred stock - no par value
(shares authorized 100,000; no shares issued)		-		-
Common stock-no par (shares authorized 10,000,000; 2,293,268
and 2,411,318 shares issued and outstanding 2008 and 2007,
respectively, excluding 291,676 shares for 2008 and
2007 of common stock held by the Company’s subsidiary)		1		1
Retained earnings		88,248,452		95,739,827
Accumulated other comprehensive income		1,609,435		3,536,012
Total stockholders’ equity		89,857,888		99,275,840
Total Liabilities and Stockholders’ Equity	$	90,908,733	$	100,200,287

See notes to condensed financial statements.

SCHEDULE II

INVESTORS TITLE COMPANY (PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF INCOME (LOSS)
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

	2008		2007		2006
Revenues:
Investment income-interest and dividends	$	985,277	$	1,146,168	$	561,400
Net realized (loss) gain on investments		(120,093)		406,623		-
Rental income		717,044		736,713		735,431
Miscellaneous income (loss)		37,139		81,938		(115,883)
Total		1,619,367		2,371,442		1,180,948
Operating Expenses:
Salaries, employee benefits, and payroll taxes		320,258		-		-
Office occupancy and operations		356,072		345,389		345,859
Business development		46,130		64,278		69,372
Taxes-other than payroll and income		155,510		138,687		79,871
Professional fees		243,394		141,297		141,500
Other expenses		98,236		105,873		114,240
Total		1,219,600		795,524		750,842

Equity in Net (Loss) Income of Affiliated Cos.		(1,634,566)		7,336,417		12,710,328
(Loss) Income Before Income Taxes		(1,234,799)		8,912,335		13,140,434
(Benefit) Provision for Income Taxes		(52,000)		510,000		(45,000)
Net (Loss) Income	$	(1,182,799)	$	8,402,335	$	13,185,434
Basic (Loss) Earnings per Common Share	$	(0.50)	$	3.39	$	5.22
Weighted Average Shares Outstanding-Basic		2,364,361		2,479,321		2,527,927
Diluted (Loss) Earnings Per Common Share	$	(0.50)	$	3.35	$	5.14
Weighted Average Shares Outstanding-Diluted		2,364,361		2,508,609		2,564,216

See notes to condensed financial statements.

SCHEDULE II

INVESTORS TITLE COMPANY (PARENT COMPANY)
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

	2008		2007		2006
Operating Activities:
Net (loss) income	$	(1,182,799)	$	8,402,335	$	13,185,434
Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
Equity in net loss (earnings) of subsidiaries		1,634,566		(7,336,417)		(12,710,328)
Depreciation		124,334		124,686		124,030
Amortization, net		12,582		15,946		(820)
Issuance of common stock in payment of bonuses and fees		1,946		1,998		5,013
Net realized loss (gain) on investments		120,093		(406,623)		-
(Benefit) provision for deferred income taxes		(119,000)		5,000		(55,000)
(Increase) decrease in receivables		(419,469)		118,627		(205,760)
Decrease (increase) in income taxes receivable-current		200,588		(378,491)		356,796
(Increase) decrease in other assets		(4,002)		47,725		(153,593)
Increase in accounts payable and accrued liabilities		126,398		30,572		260,468
Net cash provided by operating activities		495,237		625,358		806,240

Investing Activities:
Capital contribution to subsidiaries		(125,000)		-		(115,000)
Return of capital contributions from subsidiaries		-		-		80,000
Dividends received from subsidiaries		5,083,607		13,122,720		9,446,950
Purchases of available-for-sale securities		(7,437,280)		(31,721,740)		(21,310,774)
Purchases of short-term securities		(2,006,477)		(11,658,044)		(1,459,550)
Purchases of and net earnings from other investments		(15,789)		(94,737)		-
Proceeds from sales and maturities of available-for-sale securities		10,900,000		33,900,000		13,600,000
Proceeds from sales of short-term securities		736,694		-		-
Proceeds from sales and distributions from other investments		41,250		742,822		216,190
Purchases of property		-		(12,551)		(18,151)
Net cash provided by investing activities		7,177,005		4,278,470		439,665

Financing Activities:
Retirement of common stock		(5,972,043)		(4,660,259)		(2,255,735)
Exercise of options		230,801		365,284		55,272
Dividends paid (net dividends paid to subsidiary of $81,669,
$70,002 and $70,401 in 2008, 2007 and 2006, respectively)		(661,862)		(595,808)		(606,423)
Net cash used in financing activities		(6,403,104)		(4,890,783)		(2,806,886)

Net Increase (Decrease) in Cash and Cash Equivalents		1,269,138		13,045		(1,560,981)
Cash and Cash Equivalents, Beginning of Year		207,436		194,391		1,755,372
Cash and Cash Equivalents, End of Year	$	1,476,574	$	207,436	$	194,391

Supplemental Disclosures:
Cash Paid (Refunded) During the Year For
Income Taxes (net of refunds)	$	(473,000)	$	889,000	$	343,000

Non cash net unrealized loss (gain) on investments, net of deferred
tax (benefit) provision of $987,103, ($219,001) and ($185,475) for 2008,
2007 and 2006, respectively	$	1,872,812	$	(414,956)	$	(361,631)

See notes to condensed financial statements.

SCHEDULE II

INVESTORS TITLE COMPANY AND SUBSIDIARIES
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO THE CONDENSED FINANCIAL STATEMENTS

1.		The accompanying condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Investors Title Company and Subsidiaries.

2.		Cash dividends paid to Investors Title Company by its wholly owned subsidiaries were as follows:

Subsidiaries	2008		2007		2006
Investors Title Insurance Company, net*	$	4,928,607	$	10,662,720	$	4,976,950
Investors Title Exchange Corporation		-		2,250,000		4,125,000
Investors Title Accommodation Corporation		5,000		25,000		170,000
Investors Title Management Services, Inc.		-		-		60,000
Investors Title Capital Management Corporation		35,000		60,000		-
Investors Title Commercial Agency		115,000		125,000		115,000
	$	5,083,607	$	13,122,720	$	9,446,950

Total dividends of $5,010,276, $10,732,722 and $5,047,351 paid to the Parent Company in 2008, 2007 and 2006, respectively, netted with dividends of $81,669, $70,002 and $70,401 received from the Parent in 2008, 2007 and 2006, respectively.

SCHEDULE III

INVESTORS TITLE COMPANY AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

		Future
		Policy			Other
		Benefits			Policy						Benefit
	Deferred	Losses,			Claims						Claims,		Amortization of
	Policy	Claims and			and				Net		Losses and		Deferred Policy	Other
	Acquisition	Loss		Unearned	Benefits		Premium		Investment		Settlement		Acquisition	Operating		Premiums
Segment	Cost	Expenses		Premiums	Payable		Revenue		Income		Expenses		Costs	Expenses		Written
Year Ended December 31, 2008
Title Insurance	-	$	39,238,000	-	$	467,388	$	63,662,187	$	3,495,088	$	15,206,637	-	$	54,019,867	N/A
Exchange Services	-		-	-		-		-		37,840		-	-		1,160,070	N/A
All Other	-		-	-		-		-		1,025,807		-	-		3,953,486	N/A
	-	$	39,238,000	-	$	467,388	$	63,662,187	$	4,558,735	$	15,206,637	-	$	59,133,423

Year Ended December 31, 2007
Title Insurance	-	$	36,975,000	-	$	406,922	$	69,983,989	$	3,954,898	$	10,134,719	-	$	58,034,137	N/A
Exchange Services	-		-	-		-		-		29,501		-	-		1,480,094	N/A
All Other	-		-	-		-		-		1,212,779		-	-		3,469,002	N/A
	-	$	36,975,000	-	$	406,922	$	69,983,989	$	5,197,178	$	10,134,719	-	$	62,983,233

Year Ended December 31, 2006
Title Insurance	-	$	36,906,000	-	$	470,468	$	70,196,467	$	3,688,966	$	7,405,211	-	$	55,557,492	N/A
Exchange Services	-		-	-		-		-		18,138		-	-		1,346,743	N/A
All Other	-		-	-		-		-		619,231		-	-		3,022,836	N/A
	-	$	36,906,000	-	$	470,648	$	70,196,467	$	4,326,335	$	7,405,211	-	$	59,927,071

SCHEDULE IV

INVESTORS TITLE COMPANY AND SUBSIDIARIES
REINSURANCE
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

					Assumed
			Ceded to		from				Percentage of
			Other		Other				Amount Assumed
	Gross Amoun t		Co mpanies		Companies		Net Amount		to Net
Year Ended December 31, 2008
Title Insurance	$	63,770,383	$	275,089	$	166,893	$	63,662,187	0.26%

Year Ended December 31, 2007
Title Insurance	$	70,205,350	$	264,177	$	42,816	$	69,983,989	0.06%

Year Ended December 31, 2006
Title Insurance	$	70,615,891	$	441,582	$	22,158	$	70,196,467	0.03%

SCHEDULE V

INVESTORS TITLE COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006

			Additions		Additions
	Balance at		Charged to		Charged to
	Beginning of		Costs and		Other Accounts –	Deductions –			Balance at End
Description	Period		Expenses		De scr ibe	Describe*			of Period
2008
Premium Receivable
Valuation Provision	$	2,170,000	$	7,397,511	$ -	$	(8,270,511)	(a)	$	1,297,000
Reserves for Claims	$	36,975,000	$	15,206,637	$ -	$	(12,943,637)	(b)	$	39,238,000

2007
Premium Receivable
Valuation Provision	$	2,128,000	$	5,298,809	$ -	$	(5,256,809)	(a)	$	2,170,000
Reserves for Claims	$	36,906,000	$	10,134,719	$ -	$	(10,065,719)	(b)	$	36,975,000

2006
Premium Receivable
Valuation Provision	$	2,444,000	$	4,927,691	$ -	$	(5,243,691)	(a)	$	2,128,000
Reserves for Claims	$	34,857,000	$	7,405,211	$ -	$	(5,356,211)	(b)	$	36,906,000

	(a)		Cancelled premiums
	(b)		Payments of claims, net of recoveries

INDEX TO EXHIBITS

Exhibit
Number		Description
3(i)		Articles of Incorporation dated January 22, 1973, incorporated by reference to Exhibit 1 to Form 10 dated June 12, 1984

3(ii)		Bylaws – (amended and restated November 12, 2007), incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated November 12, 2007, File No. 0-11774

4		Rights Agreement, dated as of November 12, 2002, between Investors Title Company and Central Carolina Bank, a division of National Bank of Commerce, incorporated by reference to Exhibit 1 to Form 8-A filed November 15, 2002

10(i)		1997 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(viii) to Form 10-K for the year ended December 31, 1996

10(ii)		Form of Nonqualified Stock Option Agreement to Non-employee Directors dated May 13, 1997 under the 1997 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(ix) to Form 10-Q for the quarter ended June 30, 1997

10(iii)		Form of Nonqualified Stock Option Agreement under 1997 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(x) to Form 10-K for the year ended December 31, 1997

10(iv)		Form of Incentive Stock Option Agreement under 1997 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(xi) to Form 10-K for the year ended December 31, 1997

10(v)		Form of Amendment to Incentive Stock Option Agreement between Investors Title Company and George Abbitt Snead incorporated by reference to Exhibit 10(xii) to Form 10-Q for the quarter ended June 30, 2000

10(vi)		2001 Stock Option and Restricted Stock Plan, incorporated by reference to Exhibit 10(xiii) to Form 10-K for the year ended December 31, 2000

10(vii)		Amended and Restated Employment Agreement effective January 1, 2009 for J. Allen Fine

10(viii)		Amended and Restated Employment Agreement effective January 1, 2009 for James A. Fine, Jr.

10(ix)		Amended and Restated Employment Agreement effective January 1, 2009 for W. Morris Fine

10(x)		Amended and Restated Death Benefit Plan Agreement effective January 1, 2009 for J. Allen Fine

10(xi)		Amended and Restated Death Benefit Plan Agreement effective January 1, 2009 for James A. Fine, Jr.

10(xii)		Death Benefit Plan Agreement effective January 1, 2009 for W. Morris Fine

10(xiii)		Amended and Restated Nonqualified Deferred Compensation Plan effective January 1, 2009

10(xiv)		Amended and Restated Nonqualified Supplemental Retirement Benefit Plan effective January 1, 2009

21		Subsidiaries of Registrant, incorporated by reference to Exhibit 21 to Form 10-K for the year ended December 31, 2003

23		Consent of Independent Registered Public Accounting Firm

31(i)		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31(ii)		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“ Agreement ”) effective as of January 1, 2009 (the “ Effective Date ”), is between Investors Title Insurance Company, a North Carolina corporation (the “ Company ”), and J. Allen Fine (“ Executive ”).

RECITALS:

WHEREAS, Executive is presently the Chief Executive Officer of the Company and has made and is expected to continue to make major contributions to the profitability, growth and financial strength of the Company;

WHEREAS, the Company desired to secure the services of the Executive for the future;

WHEREAS, the parties hereto previously entered into that certain Employment Agreement effective as of November 17, 2003, as amended June 1, 2004 (the “Existing Employment Agreement”);

WHEREAS, pursuant to Section 16 of the Existing Employment Agreement, the Existing Employment Agreement may be amended by the parties hereto; and

WHEREAS, the parties hereto deem it appropriate to amend and restate the Existing Employment Agreement;

NOW, THEREFORE, in consideration of the mutual covenants contained herein the parties hereto agree as follows:

1. Employment . The Company shall employ Executive, and Executive accepts continued employment with the Company, upon the terms and conditions set forth in this Agreement. The term of this Agreement shall be for a period of five (5) years beginning on the date hereof, and shall on the first day of each calendar month, unless either party gives written notice to the other party at least thirty (30) days prior to such date of intent not to extend this Agreement, be extended one (1) additional month so that at all times the term of this Agreement shall be for a period of five (5) years unless earlier terminated as provided in paragraph 4 hereof (the “Employment Period”).

2. Position and Duties .

(a) During the Employment Period, Executive shall serve as the Chief Executive Officer of the Company or in such other similar position as the Executive and the Board shall agree upon and, subject to the management of the business and affairs of the Company at the direction of the Board of Directors of the Company, shall have the normal duties, responsibilities and authority of an executive serving in such position.

(b) Executive shall report to the Board of Directors.

(c) During the Employment Period, Executive shall devote his best efforts and his full business time and attention (except for participation in charitable and civic endeavors and management of Executive’s personal investments and business interests, provided such activities do not have more than a de minimis effect on Executive’s performance of his duties under this Agreement) to the business and affairs of the Company, its parent, subsidiaries and affiliates. Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

(d) Executive shall perform his duties and responsibilities principally in the Chapel Hill, North Carolina area and shall not be required to travel outside that area any more extensively than Executive has done in the recent past in the ordinary course of the business of the Company.

3. Compensation and Benefits .

(a) Salary . The Company agrees to pay Executive a salary during the Employment Period in installments based on the Company’s practices as may be in effect from time to time. Executive’s initial salary shall be at the rate of Three Hundred Three Thousand Three Hundred Sixty and No/100 Dollars ($303,360) per year, as may be increased from time to time (the “ Base Salary ”), provided, however, that if there is a Change in Control (as hereafter defined), the Executive’s Base Salary as then in effect shall double effective at the time the Change in Control becomes effective. Executive’s Base Salary shall be reviewed by the Compensation Committee of the Board (the “ Compensation Committee ”) and shall be increased, but not decreased, from time to time at least in an amount as shall be substantially consistent with increases in base salary generally awarded in the ordinary course of business to other peer executives of the Company and its affiliated companies. As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

(b) Bonuses . Executive will be entitled to such cash bonuses as the Board may determine, in its sole discretion, from time to time (“ Bonus Compensation ”). Any Bonus Compensation payable hereunder shall be paid no later than March 15 of the calendar year following the calendar year in which such cash bonus shall cease to be subject to a substantial risk of forfeiture under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

(c) Expense Reimbursement . The Company shall reimburse Executive for all reasonable expenses incurred by Executive during the Employment Period in the course of performing his duties under this Agreement that are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements applicable generally with respect to reporting and documentation of such expenses.

(d) Supplemental Retirement Cash Payment . During the portion of the Employment Period following December 31, 2008, on an annual basis (and in no event later than March 15 of each calendar year), the Company shall make a cash payment equal to the amount that the Company would have contributed to such Executive’s account under the Section 401(k) Plan as Non-Elective Company Contributions during such calendar year if Non-Elective Company Contributions to the Section 401(k) Plan for such calendar year had not been limited by Code Sections 401(a)(17), 401(k)(3), 401(m), 402(g), and 415(c) less the Non-Elective Company Contributions actually contributed to such Executive’s account under the Section 401(k) Plan during such calendar year. Such amounts shall constitute Compensation within the meaning of the Investors Title Insurance Company Nonqualified Deferred Compensation Plan.

(e) Compensation for Serving on Board . Executive shall be entitled to no extra compensation for serving on the Company’s or its affiliated companies’ Boards of Directors.

(f) Vacation and Sick Leave . Executive shall be entitled annually to thirty (30) days of paid vacation and to unlimited sick leave, provided the Employment Period is subject to termination for disability as provided under paragraph 4(b). The vacation leave shall be cumulative; provided, however, that Executive shall not be compensated for any unused vacation leave.

(g) Other Benefits . Executive shall be entitled during the Employment Period to participate, on the same basis as other executives of the Company, in such other benefits for which substantially all of the executives of the Company are from time to time generally eligible, as determined from time to time by the Board.

4. Employment Period .

(a) The Employment Period shall continue until terminated as provided in subsection (b) below. Notwithstanding anything herein to the contrary, whether a termination of employment has occurred for purposes of any deferred compensation payable hereunder and subject to Code Section 409A shall be determined in a manner consistent with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Company’s 409A Policy, if any.

(b) The Employment Period shall end upon the first to occur of any of the following events:

(i) Executive’s death;

(ii) the Company’s termination of Executive’s employment on account of Executive’s having become unable (as determined by the Board in good faith) to perform regularly Executive’s duties hereunder by reason of illness or incapacity for a period of more than one hundred eighty (180) consecutive days, plus accrued vacation days (“ Termination for Disability ”);

(iii) the Company’s termination of Executive’s employment for Cause (“ Termination for Cause ”);

(iv) the Company’s termination of Executive’s employment other than pursuant to subsections (b)(ii) or (iii) above ( “ Termination without Cause ”) by means of advance written notice of at least sixty (60) days;

(v) Executive’s termination of his employment for Good Reason by means of advance written notice to the Company at least thirty (30) days prior to the effective date of such termination (“ Termination by Executive for Good Reason ”);

(vi) Executive’s retirement at any time following his 70 ^th birthday, upon written notice to the Company of at least six (6) months (“ Retirement ”);

(vii) Executive’s termination of his employment within thirty (30) days following a Change in Control by written notice to the Company.

(i) the Executive’s conviction of, or plea of guilty or nolo contendere to, any crime involving dishonesty or moral turpitude;

(ii) the commission by Executive of a fraud against the Company or any of its parent, subsidiaries or affiliates for which he is convicted;

(iii) gross negligence or willful misconduct by Executive with respect to the Company or any of its parent, subsidiaries or affiliates which causes material detriment to the Company or any of its parent, subsidiaries or affiliates;

(iv) the falsification or manipulation of any records of the Company or any of its parent, subsidiaries or affiliates;

(v) repudiation of this Agreement by Executive or Executive’s abandonment of employment with the Company or any of its parent, subsidiaries or affiliates;

(vi) breach by Executive of any of the ‘agreements in paragraphs 6 and 7 hereof prior to the end of the Employment Period;

(vii) failure or refusal of Executive to perform his duties with the Company or any of its parent, subsidiaries or affiliates or to implement or follow the policies or directions of the Board within thirty (30) days after a written demand for performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has not performed his duties or failed to implement or follow the policies or directions of the Board.

(d) For purposes of this Agreement,

(i) “Good Reason” shall mean any breach by the Company of this Agreement that is material and that is not cured within thirty (30) days after written notice thereof to the Company from Executive;

(ii) “Change in Control” shall be deemed to have occurred upon the occurrence of any of the following events:

(A) Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than Executive or his affiliates or immediate family members, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company, or its parent, Investors Title Company, representing 50% or more of the combined voting power of the Company’s or Investors Title Company’s outstanding securities then entitled ordinarily (and apart from rights accruing under special circumstances) to vote for the election of directors; or

(B) Individuals who are “Continuing Directors” (as hereinafter defined) of Investors Title Company cease for any reason to constitute at least a majority of its Board of Directors; or

(C) A sale of more than 50% of the assets (measured in terms of monetary value) of the Company or Investors Title Company is consummated; or

(D) Any merger, consolidation, or like business combination or reorganization of the Company or Investors Title Company is consummated that results in the occurrence of any event described in subparagraph (A), (B) or (C) above.

(iii) “Continuing Directors” shall mean:

(A) the directors of Investors Title Company in office on the date of this Agreement; or

(B) any successor to any such director (and any additional director) who after the date of this Agreement (i) was nominated or selected by a majority of the Continuing Directors in the office at the time of his or her nomination or selection and (ii) who is not an “affiliate” or “associate” (as defined in Regulation 12B under the Exchange Act) of any person who is the beneficial owner, directly or indirectly, of securities representing 50% or more of the combined voting power of the Company’s outstanding securities then entitled ordinarily to vote for the election of directors.

5. Post-Employment Period Payments .

(a) If the Employment Period ends pursuant to paragraph 4 hereof for any reason, Executive shall cease to have any rights to salary, options, expense reimbursements or other benefits other than: (i) any salary which has accrued but is unpaid, a prorated Bonus Compensation for the year of termination, not less than the Executive’s pro rata share of his average bonus paid over the prior three years, and any reimbursable expenses which have been incurred but are unpaid as of the end of the Employment Period (all of which shall be paid within thirty (30) days of termination), (ii) any option rights or plan benefits which by their terms extend beyond termination of Executive’s employment (but only to the extent provided in any option theretofore granted to Executive or any other benefit plan in which Executive has participated as an employee of the Company), (iii) any benefits to which Executive is entitled under Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended (“COBRA”), (iv) any accumulations and benefits to which employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, and (v) any other amount(s) payable pursuant to the succeeding provisions of this paragraph 5.

(b) If the Employment Period ends pursuant to paragraph 4 hereof on account of Executive’s death, Termination for Disability or Retirement, the Executive or, in the event of death, his beneficiary (as identified to the Company in writing) shall be entitled to receive the following: (i) except in the case of the Executive’s death, a lump sum payment of three times the Executive’s then current base salary, but in no event less than $910,000 (ii) except in the case of the Executive’s death, a lump sum payment of three times the average of the Bonus Compensation paid to the Executive during the three (3) years prior to Executive’s death, Disability or Retirement, but in no event less than $1,055,000 (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (vi) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies, and (vii) immediate vesting of Executive’s existing stock options.

(c) If the Employment Period ends pursuant to paragraph 4 hereof on account of Termination for Cause, the Company shall pay Executive (i) an amount equal to that amount Executive would have received as salary (based on Executive’s Base Salary then in effect) had the Employment Period remained in effect until the later of the effective date of the Company’s termination of Executive’s employment or the date thirty (30) days after the Company’s notice to Executive of such termination, and (ii) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan. The Company shall make no further payments to Executive, except as provided in Section 5(a) hereof.

(d) If the Employment Period ends pursuant to paragraph 4 hereof on account of a Termination without Cause or a Termination by Executive for Good Reason, the Executive shall be entitled to receive the following: (i) a lump sum payment equal to five times that of the Executive’s then current Base Salary, but in no event less than $1,516,800, (ii) a lump sum payment equal to five times the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, but in not event less than $1,758,335, (iii) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (iv) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (vi) immediate vesting of Executive’s existing stock options, and (vii) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies.

(e) If the Executive terminates his employment because of a Change in Control, the Executive shall be entitled to receive the following: (i) a lump sum payment equal to 2.99 times the sum of the Executive’s then current Base Salary, but in no event less than $907,046 (ii) a lump sum payment equal to 2.99 times the amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, but in no event less than $1,051,484, (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (v) immediate vesting of Executive’s existing stock options, (vi) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, and (vii) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies. Upon entitlement, all sums due hereunder will be payable in cash or by official bank check within thirty (30) days following termination of the Executive’s employment. Notwithstanding anything to the contrary contained herein, in the event that any portion of the payments or benefits received or to be received by the Executive, together with any other payments received by him, whether paid or payable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or any other person or entity, would cause, either directly or indirectly, an “excess parachute payment” to exist within the meaning of said Section 280G of the Internal Revenue Code, the payments hereunder shall be reduced until no portion of the payments would fail to be deductible by reason of being an “excess parachute payment”. In the event that any dispute arises as to whether an “excess parachute payment” exists, the appropriate calculations shall be made by the Company’s regularly employed independent public auditors and delivered to the Executive in writing within thirty (30) days following the date for payment of such severance payment, and the Company will warrant to the Executive the accuracy of the calculations and the information on which they are based.

(f) Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise.

(g) Notwithstanding anything herein to the contrary, with respect to any right to a payment that constitutes a “nonqualified deferred compensation plan” subject to Section 409A of the Code, any payment to be made upon the Executive’s termination of employment shall be delayed until the first day of the seventh month following the Participant’s termination of employment if the Participant is a “specified employee” within the meaning of Section 409A of the Code and the Company’s 409A Policy, if any.

(h) Notwithstanding anything herein to the contrary, with respect to any right to a payment that (i) is to be made under this Section 5 based on the continued participation by Executive, his spouse and each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, and (ii) constitutes a “nonqualified deferred compensation plan” subject to Section 409A of the Code, any such payment shall be made in accordance with Treasury Regulation §1.409A-3(i)(1)(iv). Expenses eligible for reimbursements and in-kind benefits shall be determined based on the coverage provided by the relevant plan maintained by the Company for eligible employees, and any payments shall be made only for the period or periods specified in this Section 5. Any amount of expenses eligible for reimbursement or in-kind benefit provided during a taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year. The reimbursement of any eligible expense shall be made on or before the last day of Executive’s taxable year following the taxable year in which the expense was incurred. The right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.

6. Confidential Information . Executive acknowledges that the information, observations and data obtained by Executive while employed by the Company pursuant to this Agreement, as well as those obtained by Executive while employed by the Company or any of its subsidiaries or affiliates or any predecessor thereof prior to the date of this Agreement, concerning the business or affairs of the Company or any of its subsidiaries or affiliates or any predecessor thereof (unless and except to the extent the foregoing become generally known to and available for use by the public other than as a result of Executive’s acts or omissions to act, “ Confidential Information ”) are the property of the Company or such parent, subsidiary or affiliate. Therefore, Executive agrees that during the Employment Period and thereafter Executive shall not disclose any Confidential Information without the prior written consent of the Board unless and except to the extent that such disclosure is (i) made in the ordinary course of Executive’s performance of Executive’s duties under this Agreement or (ii) required by any subpoena or other legal process (in which event Executive will give the Company prompt notice of such subpoena or other legal process in order to permit the Company to seek appropriate protective orders), and that Executive shall not use any Confidential Information for Executive’s own account without the prior written consent of the Board. Executive shall deliver to the Company at the termination of the Employment Period, or at any other time the Company may reasonably request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information, or to the work product or the business of the Company or any of its parent, subsidiaries or affiliates that Executive may then possess or have under his control.

7. Noncompetition; Nonsolicitation .

(a) Executive acknowledges that in the course of his employment with the Company pursuant to this Agreement, Executive will become familiar, and during the course of Executive’s employment by the Company or any of its parent, subsidiaries or affiliates or any predecessor thereof prior to the date of this Agreement, Executive has become familiar with trade secrets and customer lists of and other confidential information concerning the Company and its parent, subsidiaries and affiliates and predecessors thereof and that Executive’s services have been and will be of special, unique and extraordinary value to the Company.

(b) Executive agrees that during the Employment Period and, as a condition to the receipt of payments as provided under paragraph 4, for a period of two (2) years after termination of Executive’s employment with the Company, in the State of North Carolina Executive shall not in any manner, directly or indirectly, through any person, firm or corporation, alone or as a member of a partnership or as an officer, director, shareholder, investor or employee of or in any other corporation or enterprise or otherwise, engage or be engaged in, or assist any other person, firm, corporation or enterprise in engaging or being engaged in, any business then actively being conducted by the Company or any of its parent, subsidiaries or affiliates.

(c) Executive further agrees that, during the Employment Period and, as a condition to the receipt of payments as provided under paragraph 4, for a period of two (2) years after termination of Executive’s employment with the Company, Executive shall not in any manner, directly or indirectly, induce or attempt to induce any employee of the Company or of any of its parent, subsidiaries or affiliates (other than his spouse, if applicable) to quit or abandon his or her employ.

(d) Nothing in this paragraph 7 shall prohibit Executive from being: (1) a shareholder in a mutual fund or a diversified investment company or (ii) a passive owner of not more than 5% of the outstanding equity securities of any class of a corporation or other entity which is publicly traded, so long as Executive has no active participation in the business of such corporation or other entity.

(e) In the event Executive violates any legally enforceable provision of this Agreement as to which there is a specific time period during which Executive is prohibited from taking certain actions or from engaging in certain activities, as set forth in this Agreement, then, in such event, the violation shall toll the running of such time period from the date of such violation until the violation ceases.

(f) Executive acknowledges that he has carefully considered the nature and extent of the restrictions on him and the rights and remedies conferred on the Company under this Agreement. Executive further acknowledges and agrees that the same are reasonable in time and territory, are designed to eliminate competition which would otherwise be unfair to the Company, do not stifle Executive’s inherent skill and experience, would not operate as a bar to Executive’s sole means of support, are fully required to protect the legitimate interests of the Company and do not confer a benefit upon the Company disproportionate to Executive’s detriment.

(g) If, at the time of enforcement of this paragraph, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law.

8. Enforcement . Because Executive’s services are unique and because Executive has access to Confidential Information and work product, the parties hereto agree that the Company would be damaged irreparably in the event any of the provisions of paragraph 7 hereof were not performed in accordance with their specific terms or were otherwise breached and that money damages would be an inadequate remedy for any such non-performance or breach. Therefore, the Company or its successors or assigns shall be entitled, in addition to other rights and remedies existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security).

9. Consulting and Advice . During the time period that the Executive receives post-employment payments under paragraph 5, other than by reason of death or disability, the Executive agrees that when and as requested, he will consult with the Company concerning policies, procedures and operations. The requests by the Company for consultation (1) shall comply with applicable requirements of Section 409A of the Code and the Company’s 409A Policy, if any, regarding the determination of whether a termination of employment has occurred; (2) shall be at reasonable times, with appropriate notice, not more frequent than three (3) times a month; and (3) may, at the Executive’s election, be through telephone communication.

10. Survival . Subject to any limits on applicability contained therein, paragraphs 5, 6, 7 and 9 hereof shall survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period.

11. Notices . Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight carrier or mailed by first class mail, return receipt requested. Any notice to Executive will be delivered to the last home address on file with the Company and any notice to the Company should be delivered to:

           Investors Title Insurance Company
           Attention: Secretary
           P. O. Drawer 2687
           Chapel Hill, NC 27515-2687

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement will be deemed to have been given when so delivered, sent or mailed.

12. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

13. Complete Agreement . This Agreement embodies the complete agreement and understanding between the parties with respect to the subject matter hereof and effective as of its date supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

14. Counterparts . This Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and both of which taken together shall constitute one and the same agreement.

15. Successors and Assigns . This Agreement shall bind and inure to the benefit of and be enforceable by Executive, the Company and their respective heirs, executors, personal representatives, successors and assigns, except that neither party may assign any rights or delegate any obligations hereunder without the prior written consent of the other party. Executive hereby consents to the assignment by the Company of all of its rights and obligations hereunder to any successor to the Company by merger or consolidation or purchase of all or substantially all of the Company’s assets, provided such transferee or successor assumes the liabilities of the Company hereunder.

16. Choice of Law . This Agreement shall be governed by the internal law, and not the laws of conflicts, of the State of North Carolina.

17. Amendment and Waiver . The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

18. Mediation . If a dispute arises out of or relates to this Agreement, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree to submit such controversy to mediation for resolution. The parties may use the procedures set forth in the North Carolina General Statutes’ Rules Implementing Court Ordered Mediated Settlement Conferences, where and if applicable. Provided, however, if any controversy between the parties is not resolved by mediation within sixty (60) days after the date the controversy has arisen (hereinafter “controversy date”), the parties shall settle such controversy by arbitration in accordance with the terms of the Uniform Arbitration Act, currently codified in North Carolina General Statute, Article 45A, §1-567.1, et seq ., or any successor statutes thereto, and as provided in Section 19 below.

19. Arbitration . Any dispute or controversy arising under this Agreement which is not resolved by mediation pursuant to Section 18 shall be determined and settled by an independent disinterested person agreed upon by the parties to the dispute. If the parties are unable to mutually agree upon an independent arbitrator within thirty (30) days, then each party shall appoint an independent arbitrator within thirty (30) days, and the said two (2) independent arbitrators shall appoint a third independent arbitrator within thirty (30) days, and the three (3) independent arbitrators will resolve the dispute in controversy by majority vote in accordance with the terms of the Uniform Arbitration Act currently codified in North Carolina General Statute, Article 45A, §1-567.1, et seq . or any successor statutes. The expenses of arbitration shall be shared equally by each party hereto, except that each party will pay the costs of his own legal counsel and all other incidental expenses. The parties hereto agree to be bound by the results of the arbitration. The place of arbitration shall be Orange County, North Carolina.

20. Compliance with Section 409A of the Code . This Agreement is intended to comply with Section 409A of the Code. Notwithstanding any provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with this intent.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.

INVESTORS TITLE INSURANCE COMPANY


By:

Its:

Date:


J. ALLEN FINE



Date:

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

RECITALS:

WHEREAS, Executive is presently the Executive Vice President and Chief Financial Officer of the Company and has made and is expected to continue to make major contributions to the profitability, growth and financial strength of the Company;

WHEREAS, the Company desired to secure the services of the Executive for the future;

WHEREAS, the parties hereto previously entered into that certain Employment Agreement effective as of November 17, 2003, as amended June 1, 2004 (the “Existing Employment Agreement”);

WHEREAS, pursuant to Section 16 of the Existing Employment Agreement, the Existing Employment Agreement may be amended by the parties hereto; and

WHEREAS, the parties hereto deem it appropriate to amend and restate the Existing Employment Agreement;

NOW, THEREFORE, in consideration of the mutual covenants contained herein the parties hereto agree as follows:

2. Position and Duties .

(a) During the Employment Period, Executive shall serve as the Executive Vice President and Chief Financial Officer of the Company or in such other similar position as the Executive and the Chief Executive Officer shall agree upon and, subject to the management of the business and affairs of the Company at the direction of the Chief Executive Officer of the Company, shall have the normal duties, responsibilities and authority of an executive serving in such position.

(b) Executive shall report to the Chief Executive Officer.

3. Compensation and Benefits .

(a) Salary . The Company agrees to pay Executive a salary during the Employment Period in installments based on the Company’s practices as may be in effect from time to time. Executive’s initial salary shall be at the rate of Two Hundred Fifty Five Thousand Five Hundred Sixty and No/100 Dollars ($255,560) per year, as may be increased from time to time (the “ Base Salary ”), provided, however, that if there is a Change in Control (as hereafter defined), the Executive’s Base Salary as then in effect shall double effective at the time the Change in Control becomes effective. Executive’s Base Salary shall be reviewed by the Compensation Committee of the Board (the “ Compensation Committee ”) and shall be increased, but not decreased, from time to time at least in an amount as shall be substantially consistent with increases in base salary generally awarded in the ordinary course of business to other peer executives of the Company and its affiliated companies. As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

(e) Compensation for Serving on Board . Executive shall be entitled to no extra compensation for serving on the Company’s or its affiliated companies’ Boards of Directors.

4. Employment Period .

(b) The Employment Period shall end upon the first to occur of any of the following events:

(i) Executive’s death;

(iii) the Company’s termination of Executive’s employment for Cause (“ Termination for Cause ”);

(vi) Executive’s retirement at any time following his 50 ^th birthday, upon written notice to the Company of at least six (6) months (“ Retirement ”);

(vii) Executive’s termination of his employment within thirty (30) days following a Change in Control by written notice to the Company.

(i) the Executive’s conviction of, or plea of guilty or nolo contendere to, any crime involving dishonesty or moral turpitude;

(ii) the commission by Executive of a fraud against the Company or any of its parent, subsidiaries or affiliates for which he is convicted;

(iv) the falsification or manipulation of any records of the Company or any of its parent, subsidiaries or affiliates;

(v) repudiation of this Agreement by Executive or Executive’s abandonment of employment with the Company or any of its parent, subsidiaries or affiliates;

(vi) breach by Executive of any of the ‘agreements in paragraphs 6 and 7 hereof prior to the end of the Employment Period;

(d) For purposes of this Agreement,

(i) “Good Reason” shall mean any breach by the Company of this Agreement that is material and that is not cured within thirty (30) days after written notice thereof to the Company from Executive;

(ii) “Change in Control” shall be deemed to have occurred upon the occurrence of any of the following events:

(B) Individuals who are “Continuing Directors” (as hereinafter defined) of Investors Title Company cease for any reason to constitute at least a majority of its Board of Directors; or

(C) A sale of more than 50% of the assets (measured in terms of monetary value) of the Company or Investors Title Company is consummated; or

(iii) “Continuing Directors” shall mean:

(A) the directors of Investors Title Company in office on the date of this Agreement; or

5. Post-Employment Period Payments .

(b) If the Employment Period ends pursuant to paragraph 4 hereof on account of Executive’s death, Termination for Disability or Retirement, the Executive or, in the event of death, his beneficiary (as identified to the Company in writing) shall be entitled to receive the following: (i) except in the case of the Executive’s death, a lump sum payment of three times the Executive’s then current base salary, but in no event less than $766,680 (ii) except in the case of the Executive’s death, a lump sum payment of three times the average of the Bonus Compensation paid to the Executive during the three (3) years prior to Executive’s death, Disability or Retirement, but in no event less than $1,030,000 (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (vi) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies, and (vii) immediate vesting of Executive’s existing stock options.

(d) If the Employment Period ends pursuant to paragraph 4 hereof on account of a Termination without Cause or a Termination by Executive for Good Reason, the Executive shall be entitled to receive the following: (i) a lump sum payment equal to five times that of the Executive’s then current Base Salary, but in no event less than $1,277,800, (ii) a lump sum payment equal to five times the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, but in not event less than $1,716,665, (iii) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (iv) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (vi) immediate vesting of Executive’s existing stock options, and (vii) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies.

(e) If the Executive terminates his employment because of a Change in Control, the Executive shall be entitled to receive the following: (i) a lump sum payment equal to 2.99 times the sum of the Executive’s then current Base Salary, but in no event less than $764,124 (ii) a lump sum payment equal to 2.99 times the amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, but in no event less than $1,026,565, (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (v) immediate vesting of Executive’s existing stock options, (vi) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, and (vii) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies. Upon entitlement, all sums due hereunder will be payable in cash or by official bank check within thirty (30) days following termination of the Executive’s employment. Notwithstanding anything to the contrary contained herein, in the event that any portion of the payments or benefits received or to be received by the Executive, together with any other payments received by him, whether paid or payable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or any other person or entity, would cause, either directly or indirectly, an “excess parachute payment” to exist within the meaning of said Section 280G of the Internal Revenue Code, the payments hereunder shall be reduced until no portion of the payments would fail to be deductible by reason of being an “excess parachute payment”. In the event that any dispute arises as to whether an “excess parachute payment” exists, the appropriate calculations shall be made by the Company’s regularly employed independent public auditors and delivered to the Executive in writing within thirty (30) days following the date for payment of such severance payment, and the Company will warrant to the Executive the accuracy of the calculations and the information on which they are based.

(f) Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise.

7. Noncompetition; Nonsolicitation .

Investors Title Insurance Company
Attention: Secretary
P. O. Drawer 2687
Chapel Hill, NC 27515-2687

16. Choice of Law . This Agreement shall be governed by the internal law, and not the laws of conflicts, of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.

	INVESTORS TITLE INSURANCE COMPANY


	By:

	Its:

	Date:


	JAMES A. FINE, JR.



	Date:

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

RECITALS:

WHEREAS, Executive is presently the President and Chief Operating Officer of the Company and has made and is expected to continue to make major contributions to the profitability, growth and financial strength of the Company;

WHEREAS, the Company desired to secure the services of the Executive for the future;

WHEREAS, the parties hereto previously entered into that certain Employment Agreement effective as of November 17, 2003, as amended June 1, 2004 (the “Existing Employment Agreement”);

WHEREAS, pursuant to Section 16 of the Existing Employment Agreement, the Existing Employment Agreement may be amended by the parties hereto; and

WHEREAS, the parties hereto deem it appropriate to amend and restate the Existing Employment Agreement;

NOW, THEREFORE, in consideration of the mutual covenants contained herein the parties hereto agree as follows:

2. Position and Duties .

(a) During the Employment Period, Executive shall serve as the President and Chief Operating Officer of the Company or in such other similar position as the Executive and the Chief Executive Officer shall agree upon and, subject to the management of the business and affairs of the Company at the direction of the Chief Executive Officer of the Company, shall have the normal duties, responsibilities and authority of an executive serving in such position.

(b) Executive shall report to the Chief Executive Officer.

3. Compensation and Benefits .

(a) Salary . The Company agrees to pay Executive a salary during the Employment Period in installments based on the Company’s practices as may be in effect from time to time. Executive’s initial salary shall be at the rate of Two Hundred Fifty Five Thousand Five Hundred Sixty and No/100 Dollars ($255,560) per year, as may be increased from time to time (the “ Base Salary ”), provided, however, that if there is a Change in Control (as hereafter defined), the Executive’s Base Salary as then in effect shall double effective at the time the Change in Control becomes effective. Executive’s Base Salary shall be reviewed by the Compensation Committee of the Board (the “ Compensation Committee ”) and shall be increased, but not decreased, from time to time at least in an amount as shall be substantially consistent with increases in base salary generally awarded in the ordinary course of business to other peer executives of the Company and its affiliated companies. As used in this Agreement, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Company.

(e) Compensation for Serving on Board . Executive shall be entitled to no extra compensation for serving on the Company’s or its affiliated companies’ Boards of Directors.

4. Employment Period .

(b) The Employment Period shall end upon the first to occur of any of the following events:

(i) Executive’s death;

(iii) the Company’s termination of Executive’s employment for Cause (“ Termination for Cause ”);

(iv) the Company’s termination of Executive’s employment other than pursuant to subsections (b)(ii) or (iii) above (“ Termination without Cause ”) by means of advance written notice of at least sixty (60) days;

(vi) Executive’s retirement at any time following his 50 ^th birthday, upon written notice to the Company of at least six (6) months (“ Retirement ”);

(vii) Executive’s termination of his employment within thirty (30) days following a Change in Control by written notice to the Company.

(i) the Executive’s conviction of, or plea of guilty or nolo contendere to, any crime involving dishonesty or moral turpitude;

(ii) the commission by Executive of a fraud against the Company or any of its parent, subsidiaries or affiliates for which he is convicted;

(iv) the falsification or manipulation of any records of the Company or any of its parent, subsidiaries or affiliates;

(v) repudiation of this Agreement by Executive or Executive’s abandonment of employment with the Company or any of its parent, subsidiaries or affiliates;

(vi) breach by Executive of any of the ‘agreements in paragraphs 6 and 7 hereof prior to the end of the Employment Period;

(d) For purposes of this Agreement,

(i) “Good Reason” shall mean any breach by the Company of this Agreement that is material and that is not cured within thirty (30) days after written notice thereof to the Company from Executive;

(ii) “Change in Control” shall be deemed to have occurred upon the occurrence of any of the following events:

(B) Individuals who are “Continuing Directors” (as hereinafter defined) of Investors Title Company cease for any reason to constitute at least a majority of its Board of Directors; or

(C) A sale of more than 50% of the assets (measured in terms of monetary value) of the Company or Investors Title Company is consummated; or

(iii) “Continuing Directors” shall mean:

(A) the directors of Investors Title Company in office on the date of this Agreement; or

5. Post-Employment Period Payments .

(b) If the Employment Period ends pursuant to paragraph 4 hereof on account of Executive’s death, Termination for Disability or Retirement, the Executive or, in the event of death, his beneficiary (as identified to the Company in writing) shall be entitled to receive the following: (i) except in the case of the Executive’s death, a lump sum payment of three times the Executive’s then current base salary, but in no event less than $766,680 (ii) except in the case of the Executive’s death, a lump sum payment of three times the average of the Bonus Compensation paid to the Executive during the three (3) years prior to Executive’s death, Disability or Retirement, but in no event less than $1,015,000 (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (vi) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies, and (vii) immediate vesting of Executive’s existing stock options.

(d) If the Employment Period ends pursuant to paragraph 4 hereof on account of a Termination without Cause or a Termination by Executive for Good Reason, the Executive shall be entitled to receive the following: (i) a lump sum payment equal to five times that of the Executive’s then current Base Salary, but in no event less than $1,277,800, (ii) a lump sum payment equal to five times the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, but in not event less than $1,691,665, (iii) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, (iv) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (v) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (vi) immediate vesting of Executive’s existing stock options, and (vii) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies.

(e) If the Executive terminates his employment because of a Change in Control, the Executive shall be entitled to receive the following: (i) a lump sum payment equal to 2.99 times the sum of the Executive’s then current Base Salary, but in no event less than $764,124 (ii) a lump sum payment equal to 2.99 times the amount equal to the average of the Bonus Compensation paid to the Executive during the three (3) years prior to the termination date, but in no event less than $1,011,615, (iii) continued participation by Executive and his spouse in the Company’s medical, dental and vision health plan, at the Company’s expense, until Executive dies or, if later, until his surviving spouse dies, (iv) continued participation by each of Executive’s dependent children in the Company’s medical, dental and vision health plan, at the Company’s expense, until each child is no longer a dependent, as defined by the applicable plan, (v) immediate vesting of Executive’s existing stock options, (vi) any accumulations and benefits to which Employee is entitled under the Nonqualified Supplemental Retirement Benefit Plan and a Nonqualified Deferred Compensation Plan, and (vii) at the Executive’s option, the Company shall transfer to the Executive the ownership of any and all life insurance policies insuring the Executive’s life that the Company has purchased and the Executive shall thereafter be liable for all payments due on such policies. Upon entitlement, all sums due hereunder will be payable in cash or by official bank check within thirty (30) days following termination of the Executive’s employment. Notwithstanding anything to the contrary contained herein, in the event that any portion of the payments or benefits received or to be received by the Executive, together with any other payments received by him, whether paid or payable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company or any other person or entity, would cause, either directly or indirectly, an “excess parachute payment” to exist within the meaning of said Section 280G of the Internal Revenue Code, the payments hereunder shall be reduced until no portion of the payments would fail to be deductible by reason of being an “excess parachute payment”. In the event that any dispute arises as to whether an “excess parachute payment” exists, the appropriate calculations shall be made by the Company’s regularly employed independent public auditors and delivered to the Executive in writing within thirty (30) days following the date for payment of such severance payment, and the Company will warrant to the Executive the accuracy of the calculations and the information on which they are based.

(f) Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise.

7. Noncompetition; Nonsolicitation .

Investors Title Insurance Company
Attention: Secretary
P. O. Drawer 2687
Chapel Hill, NC 27515-2687

16. Choice of Law . This Agreement shall be governed by the internal law, and not the laws of conflicts, of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date written below.

	INVESTORS TITLE INSURANCE COMPANY


	By:

	Its:

	Date:


	W. MORRIS FINE



	Date:

AMENDED AND RESTATED DEATH BENEFIT PLAN AGREEMENT

THIS AMENDED AND RESTATED DEATH BENEFIT PLAN AGREEMENT, effective as of January 1, 2009 (the “Agreement”), is by and between Investors Title Insurance Company, a North Carolina corporation (the “Company”), and J. Allen Fine, an individual residing in the State of North Carolina (the “Executive”),

WITNESSETH THAT:

WHEREAS, the Executive is employed by the Company under the terms of an Employment Agreement dated November 17, 2003, as amended from time to time (the “Employment Agreement”), and

WHEREAS, the Company recognizes the valuable services heretofore performed for it by the Executive and wishes to encourage his continued employment; and

WHEREAS, the Executive wishes to be assured that his irrevocably designated beneficiary will be entitled to a certain benefit in the event of Executive’s death; and

WHEREAS, the parties hereto previously entered into that certain Death Benefit Plan Agreement, dated as of April 1, 2004 (the “Existing Death Benefit Plan Agreement”), which sets forth the terms and conditions upon which the Company will pay such death benefit; and

WHEREAS, the parties deem it appropriate to amend and restate the Existing Death Benefit Plan Agreement; and

WHEREAS, the parties hereto intend that this Agreement be considered an unfunded arrangement, maintained primarily to provide deferred compensation benefits for the Executive, a member of a select group of management or highly compensated employees of the Company, for purposes of the Employee Retirement Income Security Act of 1974, as amended;

NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained, the parties hereto agree as follows:

1. DEATH BENEFIT .

a. In the event of the death of the Executive while employed by the Company, the Company shall thereafter pay to the Executive’s designated beneficiary within sixty (60) days of the death of the Executive a lump sum amount equal to:

(i) an amount equal to three (3) times the sum of the Executive's (i) current Base Salary, but in no event less than $910,000, plus (ii) average Bonus Compensation for the past three (3) years (as such terms are defined in the Employment Agreement), but in no event less than $1,055,000.

b. The Executive hereby irrevocably designates The James Allen Fine Irrevocable Trust dated August 14, 1998 as his beneficiary hereunder.

2. BENEFIT CONTINGENT ON CONTINUED EMPLOYMENT .

a. In the event that the employment of the Executive by the Company is terminated due to Retirement, Disability, Termination without Cause or Termination by Executive for Good Reason, the Employment Agreement shall govern.

b. In the event that the employment of the Executive by the Company is terminated due to any reason other than his death or a reason listed in Section 2(a), this Agreement shall terminate and the Company shall have no obligation to provide the Executive or his designated beneficiary with any benefits hereunder.

c. Nothing contained herein shall be construed to be a contract of employment for any term of years, nor as conferring upon the Executive the right to continue to be employed by the Company, in any capacity. It is expressly understood by the parties hereto that this Agreement relates exclusively to a death benefit for the Executive’s services, and is not intended to alter in any way the rights and responsibilities under the Employment Agreement, as such may be amended from time to time.

3. NO TRUST CREATED . Nothing contained in this Agreement, and no action taken pursuant to its provisions by either party hereto shall create, or be construed to create, a trust of any kind, or a fiduciary relationship between the Company and the Executive, his designated beneficiary or any other person.

4. BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS; UNSECURED GENERAL CREDITOR STATUS OF EXECUTIVE .

a. The payments to the Executive’s designated beneficiary hereunder shall be made from assets which shall continue, for all purposes, to be a part of the general, unrestricted assets of the Company; no such person shall have nor acquire any interest in any such assets by virtue of the provisions of this Agreement. The Company’s obligation hereunder shall be an unfunded and unsecured promise to pay money in the future. To the extent that any person acquires a right to receive payments from the Company under the provisions hereof, such right shall be no greater than the right of any unsecured general creditor of the Company; no such person shall have nor require any legal or equitable right, interest or claim in or to any property or assets of the Company.

b. In the event that, in its discretion, the Company purchases an insurance policy or policies insuring the life of the Executive (or any other property) to allow the Company to recover, in whole, or in part, the cost of providing the benefits hereunder, neither the Executive nor any of his designated beneficiaries shall have or acquire any right whatsoever therein or in the proceeds therefrom. The Company shall be the sole owner and beneficiary of any such policy or policies, and, as such, shall possess and may exercise all incidents of ownership therein. No such policy, policies or other property shall be held in any trust for the Executive or any other person nor as collateral security for any obligation of the Company hereunder.

5. NON-ASSIGNABILITY OF BENEFITS . Neither the Executive nor his designated beneficiary under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the amounts payable hereunder. Such amounts shall not be subject to seizure by any creditor of any such beneficiary, by a proceeding at law or in equity, nor transferable by operation of law in the event of the bankruptcy, insolvency or death of the Executive, his designated beneficiary, or any other beneficiary hereunder. Any such attempted assignment or transfer shall be void and shall terminate this Agreement; the Company shall thereupon have no further liability hereunder.

6. ADMINISTRATION, DETERMINATION OF BENEFITS, AND CLAIMS PROCEDURE .

a. The Plan shall be administered by the Company’s Board of Directors, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Board deems appropriate including the authority to determine eligibility for benefits under the Plan. The Board shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Board shall be final and binding on all persons and parties concerned. Any benefits payable under this Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.

b. Expenses of administration shall be paid by the Company. The Board shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.

c. Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to the Executive, the Executive’s designated beneficiary, the Executive’s estate or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.

d. All claims for benefits shall be handled through the following procedure:

(i) Claim.

A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the President of the Company at its then principal place of business.

(ii) Claim Decision.

Upon receipt of a claim, the Company shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Company may, however, extend the reply period for an additional ninety (90) days for reasonable cause.

If the claim is denied in whole or in part, the Company shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

(A) The specific reason or reasons for such denial;

(B) The specific reference to pertinent provisions of this Agreement on which such denial is based;

(C) A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

(D) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

(E) The time limits for requesting a review under Section 6(e)(iii) and for review under Section 6(e)(iv).

(iii) Request for Review.

Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Assistant Secretary of the Company review the determination of the Company. Such request must be addressed to the Assistant Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Company’s determination by the Assistant Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Company’s determination.

(iv) Review of Decision.

Within sixty (60) days after the Assistant Secretary’s receipt of a request for review, he will review the Company’s determination. After considering all materials presented by the Claimant, the Assistant Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Assistant Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

7. AMENDMENT AND TERMINATION . This Agreement may not be amended, altered, modified, or terminated, except by a written instrument signed by the parties hereto, or their respective successors or assigns.

8. CHANGE OF CONTROL . Following a Change of Control (as that term is defined in the Employment Agreement), the Plan shall be continued by the surviving entity, and the Executive’s rights under this Agreement shall not be impaired without the consent of the Executive.

9. INUREMENT . This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and the Executive, his successors, heirs, executors, administrators and beneficiaries.

10. NOTICES . Any notice, consent or demand required or permitted to be given under the provisions of this Agreement shall be in writing, and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, addressed to such party’s last known address as shown on the records of the Company. The date of such mailing shall be deemed the date of notice, consent or demand.

11. GOVERNING LAW . This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.

	Investors Title Insurance Company


	By:
		President
ATTEST:



Secretary




	Executive

AMENDED AND RESTATED DEATH BENEFIT PLAN AGREEMENT

THIS AMENDED AND RESTATED DEATH BENEFIT PLAN AGREEMENT, effective as of January 1, 2009 (the “Agreement”), is by and between Investors Title Insurance Company, a North Carolina corporation (the “Company”), and James A. Fine, Jr., an individual residing in the State of North Carolina (the “Executive”),

WITNESSETH THAT:

WHEREAS, the Executive is employed by the Company under the terms of an Employment Agreement dated November 17, 2003, as amended from time to time (the “Employment Agreement”), and

WHEREAS, the Company recognizes the valuable services heretofore performed for it by the Executive and wishes to encourage his continued employment; and

WHEREAS, the Executive wishes to be assured that his irrevocably designated beneficiary will be entitled to a certain benefit in the event of Executive’s death; and

WHEREAS, the parties hereto previously entered into that certain Death Benefit Plan Agreement, dated as of May 19, 2004 (the “Existing Death Benefit Plan Agreement”), which sets forth the terms and conditions upon which the Company will pay such death benefit; and

WHEREAS, the parties deem it appropriate to amend and restate the Existing Death Benefit Plan Agreement; and

NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained, the parties hereto agree as follows:

1. DEATH BENEFIT .

(i) an amount equal to three (3) times the sum of the Executive's (i) current Base Salary, but in no event less than $766,680, plus (ii) average Bonus Compensation for the past three (3) years (as such terms are defined in the Employment Agreement), but in no event less than $1,030,000, and

(ii) two million dollars ($2,000,000), reduced by the amount that the Executive's estate will receive under Section 1.a.(i) of this Agreement and Sections 5(b)(iii) and 5(b)(v) of the Employment Agreement, plus the amount accrued on the Company's books pursuant to Section 1.a.(i) of this Agreement and Sections 5(b)(iii) and 5(b)(v) of the Employment Agreement.

b. The Executive hereby irrevocably designates The James Allen Fine, Jr. Irrevocable Family Trust dated April 16, 2003 as his beneficiary hereunder.

2. BENEFIT CONTINGENT ON CONTINUED EMPLOYMENT .

4. BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS; UNSECURED GENERAL CREDITOR STATUS OF EXECUTIVE .

b. In the event that, in its discretion, the Company purchases an insurance policy or policies insuring the life of the Executive (or any other property) to allow the Company to recover, in whole, or in part, the cost of providing the benefits hereunder, neither the Executive nor any of his designated beneficiaries shall have or acquire any 2 right whatsoever therein or in the proceeds therefrom. The Company shall be the sole owner and beneficiary of any such policy or policies, and, as such, shall possess and may exercise all incidents of ownership therein. No such policy, policies or other property shall be held in any trust for the Executive or any other person nor as collateral security for any obligation of the Company hereunder.

6. ADMINISTRATION, DETERMINATION OF BENEFITS, AND CLAIMS PROCEDURE .

d. All claims for benefits shall be handled through the following procedure:

(i) Claim.

(ii) Claim Decision.

If the claim is denied in whole or in part, the Company shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

(A) The specific reason or reasons for such denial;

(B) The specific reference to pertinent provisions of this Agreement on which such denial is based;

(C) A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

(D) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

(E) The time limits for requesting a review under Section 6(e)(iii) and for review under Section 6(e)(iv).

(iii) Request for Review.

(iv) Review of Decision.

11. GOVERNING LAW . This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.

	Investors Title Insurance Company


	By:
		President
ATTEST:



Secretary




	Executive

DEATH BENEFIT PLAN AGREEMENT

THIS DEATH BENEFIT PLAN AGREEMENT, effective as of January 1, 2009 (the “Agreement”), is by and between Investors Title Insurance Company, a North Carolina corporation (the “Company”), and W. Morris Fine, an individual residing in the State of North Carolina (the “Executive”),

WITNESSETH THAT:

WHEREAS, the Executive is employed by the Company under the terms of an Employment Agreement dated November 17, 2003, as amended from time to time (the “Employment Agreement”), and

WHEREAS, the Company recognizes the valuable services heretofore performed for it by the Executive and wishes to encourage his continued employment; and

WHEREAS, the Executive wishes to be assured that his irrevocably designated beneficiary will be entitled to a certain benefit in the event of Executive’s death; and

WHEREAS, the parties hereto wish to provide the terms and conditions upon which the Company shall pay such benefit to the Executive’s beneficiary after the Executive’s death;

NOW, THEREFORE, in consideration of the premises and of the mutual promises herein contained, the parties hereto agree as follows:

1. DEATH BENEFIT .

(i) an amount equal to three (3) times the sum of the Executive's (i) current Base Salary, but in no event less than $766,680 plus (ii) average Bonus Compensation for the past three (3) years (as such terms are defined in the Employment Agreement), but in no event less than $1,015,000, and

b. The Executive hereby irrevocably designates The William Morris Fine Irrevocable Family Trust dated December 30, 2004 as his beneficiary hereunder.

2. BENEFIT CONTINGENT ON CONTINUED EMPLOYMENT .

4. BENEFITS PAYABLE ONLY FROM GENERAL CORPORATE ASSETS; UNSECURED GENERAL CREDITOR STATUS OF EXECUTIVE .

6. ADMINISTRATION, DETERMINATION OF BENEFITS, AND CLAIMS PROCEDURE .

d. All claims for benefits shall be handled through the following procedure:

(i) Claim.

(ii) Claim Decision.

If the claim is denied in whole or in part, the Company shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

(A) The specific reason or reasons for such denial;

(B) The specific reference to pertinent provisions of this Agreement on which such denial is based;

(C) A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

(D) Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

(E) The time limits for requesting a review under Section 6(e)(iii) and for review under Section 6(e)(iv).

(iii) Request for Review.

(iv) Review of Decision.

11. GOVERNING LAW . This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of North Carolina.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in duplicate, as of the day and year first above written.

	Investors Title Insurance Company


	By:
		President
ATTEST:



Secretary




	Executive

NONQUALIFIED DEFERRED COMPENSATION PLAN

As Amended and Restated Effective January 1, 2009

TABLE OF CONTENTS

		Page
PREAMBLE		1

ARTICLE 1 DEFINITIONS		1
1.1	“ Account ”	1
1.2	“ Beneficiary ”	1
1.3	“ Benefit Commencement Date ”	1
1.4	“ Board” or “Board of Directors ”	1
1.5	“ Code ”	1
1.6	“ Committee ”	1
1.7	“ Company ”	1
1.8	“ Company Contributions ”	1
1.9	“ Compensation ”	2
1.10	“ Effective Date ”	2
1.11	“ Elective Deferral ”	2
1.12	“ Eligible Employee ”	2
1.13	“ Participant ”	2
1.14	“ Plan ”	2
1.15	“ Plan Administrator ”	2
1.16	“ Plan Year ”	2
1.17	“ Rabbi Trust ”	2
1.18	“ Schedule ”	2
1.19	“ SEP ”	2
1.20	“ Section 401(k) Plan ”	2
1.21	“ Termination of Employment ”	2
1.22	“ Valuation Date ”	2

ARTICLE 2 PARTICIPATION		3
2.1	Eligible Class	3
2.2	Commencement of Participation	3

ARTICLE 3 ESTABLISHMENT OF ACCOUNTS		4
3.1	Accounts	4
3.2	Credits and Debits to Accounts	4

ARTICLE 4 CONTRIBUTIONS AND BENEFITS		5
4.1	Benefits	5
4.2	Elective Deferrals	5
4.3	Company Contributions	5
4.4	Crediting Elective Contributions to Accounts	6
4.5	Taxation	6
4.6	Investment Funds	6
4.7	Company Investments	7

TABLE OF CONTENTS
(continued)

		Page
ARTICLE 5 BENEFIT EVENTS		8
5.1	Benefits Following Termination of Employment	8
5.2	Death Benefits	8
5.3	Payor	8
5.4	One-Time Benefit Event	8

ARTICLE 6 VALUATION AND DISTRIBUTION OF ACCOUNTS		9
6.1	Valuation of Accounts	9
6.2	Commencement of Benefits	9
6.3	Form and Amount of Payment	9
6.4	Deferral of Benefits	9

ARTICLE 7 ADMINISTRATION AND CLAIMS PROCEDURE		10
7.1	Administration	10
7.2	Expenses; Reliance on Third-Parties	10
7.3	Annual Statements	10
7.4	Appointment of a Conservator	10
7.5	Limitation of Liability	10
7.6	Claims for Benefits	11

ARTICLE 8 FUNDING		12
8.1	In General	12
8.2	Rabbi Trust	12

ARTICLE 9 AMENDMENT, TERMINATION AND CHANGE OF CONTROL		13
9.1	Amendment or Termination	13
9.2	Change of Control	13

ARTICLE 10 GENERAL PROVISIONS		14
10.1	Payment to Minors and Incompetents	14
10.2	No Contract	14
10.3	Use of Masculine and Feminine; Singular and Plural	14
10.4	Non-Alienation of Benefits	14
10.5	Protective Provisions	14
10.6	Governing Law	15
10.7	Captions	15
10.8	Compliance with Section 409A of the Code	15

PREAMBLE

Investors Title Insurance Company the (“Company”) previously established a non-qualified deferred compensation plan referred to as the Investors Title Insurance Company Nonqualified Deferred Compensation Plan (the “Plan”), originally effective June 1, 2004. The Company is amending and restating the Plan effective January 1, 2009 as set forth herein to (i) reflect certain design changes to the Plan, (ii) provide for the Plan’s documentary compliance with the requirements of Section 409A of the Code, and (iii) otherwise meet current needs.

The purpose of this Plan is to permit selected management employees to set-aside additional retirement benefits on a pre-tax basis. This Plan shall be unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(l) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan is intended to be effective with respect to Compensation earned after December 31, 2002.

Benefits are based upon hypothetical contributions from a Participant’s Compensation, and from Company Contributions, in each case which are credited to a Participant’s “Account”.

It is intended that funds accumulated under this Plan on a Participant’s behalf will be paid to the Participant at a specified future date determined under procedures described herein, or upon disability or Termination of Employment. The Participant may select a lump sum, or from among other payment options for Plan benefits. Upon the Participant’s death, the Participant’s remaining Account balance, if any, will be paid to the Participant’s named Beneficiary.

Account balances resulting from a Participant’s deferred compensation may be credited with interest, at a rate determined by the Company, or with amounts reflecting and corresponding to the performance (i.e., income, gains, losses, etc.) of a designated security or index. Further, the Company may choose to set aside assets relating to Plan obligations in a Rabbi Trust, the corpus of which will be available to the Company’s creditors in the event of bankruptcy. However, the Company is under no obligation to invest amounts deemed contributed to the Plan or to set aside funds in a Rabbi Trust. In all cases, the Company may elect to pay the benefits promised hereunder from other general assets. Notwithstanding the fact that the Company may set aside assets in respect of its obligations under the Plan, the Plan is unfunded and the rights of Participants and Beneficiaries are limited to those of general, unsecured creditors of the Company.

ARTICLE 1
DEFINITIONS

The following words and phrases when used in the Plan shall have the following meanings, unless a different meaning is plainly required by the context:

1.1	“ Account ” means the bookkeeping account established for the measurement of the Company’s accumulated liability to a Participant under the Plan. Each Participant’s Account will reflect the undistributed balance to the credit of the Participant, representing accumulated Elective Deferrals and Company Contributions, and the hypothetical investment earnings, gains and losses credited to the Account under the terms of the Plan.

1.2	“ Beneficiary ” means the person, persons or trust designated by the Participant or former Participant to receive benefits under the Plan in the event of the Participant’s death prior to the full distribution of his Account. A Participant shall designate his Beneficiary or Beneficiaries in writing under the specific procedures as shall be established by the Plan Administrator. A Participant may change his Beneficiaries at any time by delivering written instructions to the Plan Administrator. In the event a Participant dies without a valid designation of Beneficiary in effect, the Participant’s remaining Account shall be payable to his spouse or, if the Participant is not married at the time of death, to his estate.

1.3	“ Benefit Commencement Date ” means the date upon which the Participant’s Termination of Employment occurs or is deemed to occur in accordance with the provisions of Article 4 and after which the distribution of benefits to the Participant will commence in accordance with the provisions of Article 4 and Article 5.

1.4	“ Board” or “Board of Directors ” means the Board of Directors of Investors Title Insurance Company.

1.5	“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations issued thereunder. Reference to any section of the Code shall include any successor provision thereto.

1.6	“ Committee ” means the Compensation Committee of Investors Title Insurance Company or such other person or persons designated by the Company to determine the eligibility of employees for participation in the Plan in accordance with the provisions of Article 2, and to provide oversight to the administration of the plan in accordance with Article 7.

1.7	“ Company ” means Investors Title Insurance Company, a North Carolina corporation, and its successor or successors. The Company is a wholly-owned subsidiary of Investors Title Company.

1.8	“ Company Contributions ” means the amounts which the Company will credit to a Participant’s Account, as provided in Section 4.3.

1.9	“ Compensation ” means the aggregate compensation paid to a participant by the Company for a Plan Year, including salary, overtime pay, commissions, bonuses and all other items that constitute wages within the meaning of § 3401 (a) of the Code or are required to be reported under §§ 6041(d), 6051(a)(3) or 6052 of the Code. Compensation also includes Elective Deferrals under this Plan and any deferrals under cash-or-deferred arrangements or cafeteria plans that are not includible in gross income by reason of § 125 or § 402(a)(8) of the Code but does not include any other amounts contributed pursuant to, or received under, this Plan or any other plan of deferred compensation. Compensation excludes all stock option transactions, relocation reimbursements, and automobile allowances.

1.10	“ Effective Date ” means June 1, 2004.

1.11	“ Elective Deferral ” means the amounts of Compensation which a Participant may elect to defer receipt until a later date, and which will be credited to such Participant’s Account, as provided in Section 4.2.

1.12	“ Eligible Employee ” means an employee of the Company who is included in the eligible class described in Section 2.1, and who is listed on the Schedule.

1.13	“ Participant ” means an Eligible Employee for whom an Account is being maintained under the terms of the Plan.

1.14	“ Plan ” means the Investors Title Insurance Company Non-Qualified Deferred Compensation Plan as set forth in this document and as amended from time to time.

1.15	“ Plan Administrator ” means the Company.

1.16	“ Plan Year ” means each calendar year commencing January 1, 2004 and thereafter.

1.17	“ Rabbi Trust ” means, for the purposes of this Plan, a grantor trust under Subpart E of Subchapter J of Chapter I of the Code established by an employer in connection with a nonqualified deferred compensation or supplemental retirement benefit plan, the assets of which may be reached by the employer grantor’s general creditors.

1.18	“ Schedule ” means the document which lists the Eligible Employees who are Participants in the Plan, as such Schedule is amended from time to time.

1.19	“ SEP ” means the simplified employee pension which the Company sponsored and administered prior to January 1, 2008, as provided in Code Section 408.

1.20	“ Section 401(k) Plan ” means the Investors Title Insurance Company and Affiliates 401(k) Plan, effective February 1, 2008, which the Company sponsors and administers, as provided in Code Section 401(k).

1.21	“ Termination of Employment ” means any termination of the employee/employer relationship between a Participant and the Company for any reason. For purposes of the Plan, whether a “Termination of Employment” has occurred shall be determined in a manner consistent with the requirements of Section 409A of the Code and the Company’s 409A Policy, if any.

1.22	“ Valuation Date ” means the last day of each calendar quarter, and is the date on which Participant Account values are determined.

ARTICLE 2
PARTICIPATION

2.1	Eligible Class .

	(a)	Except as provided in (b) and (c) below, an individual who is employed by the Company is an Eligible Employee with respect to a particular Plan Year only if he is both (i) within a select group of management or highly compensated Employees within the meaning of Sections 201(2), 301 (a)(3) and 401 (a)(l) of ERISA, as determined by the Committee in its sole discretion, and (ii) identified by the Company as an Eligible Employee and listed in the Schedule A, attached hereto.

	(b)	Each Eligible Employee must cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder. Notwithstanding any provision in the Plan to the contrary, an individual who would otherwise be eligible to receive benefits under the Plan shall nevertheless be considered ineligible, and may be barred by the Company from participation in the Plan, (i) if he refuses to cooperate with any requirement which the Committee or Plan Administrator may reasonably impose; or (ii) if the Company chooses, in its discretion, to purchase one or more life insurance policies on the life of the individual in connection with its obligations under this plan, and the individual fails to submit a complete and accurate application in connection with the acquisition of the policy(ies), or fails to submit to any physical examination that the insurer may require, or fails to provide any other information that the insurer or Plan Administrator may reasonably request or to comply with any other requirement which the insurer may reasonably impose.

2.2	Commencement of Participation .

	Each Eligible Employee shall first become a Participant as of the initial pay period for the first Plan Year following the date upon which he is first determined by the Committee to be an Eligible Employee.

ARTICLE 3
ESTABLISHMENT OF ACCOUNTS

3.1	Accounts .

	The Plan Administrator will establish and maintain separate memorandum Accounts for each Participant, for bookkeeping purpose only, which will be used to measure the amount of the Company’s liability to each Participant and Beneficiary under this Plan.

3.2	Credits and Debits to Accounts .

	The Plan Administrator will, as often and as soon as may be reasonable and practicable, make such adjustments to the Accounts, by credit (addition) or debit (reduction), as may be necessary and/or appropriate to reflect:

	(a)	a Participant’s Elective Deferrals,

	(b)	any Company Contributions,

	(c)	any accrued interest (if Company contributions are deemed to be invested at interest), and

	(d)	any income and/or expense, and any gain or loss (i.e., increase or decrease, whether realized or unrealized), associated with any other investment(s) in which the contributions are deemed be invested, so that the balance of any portion of the Account that is deemed to be invested will be adjusted in the same manner and amount that it would have been adjusted had the Account investment actually been made (i.e., so as to reflect the net amount invested, and any changes in the investment’s market or net asset value).

ARTICLE 4
CONTRIBUTIONS AND BENEFITS

4.1	Benefits .

	Participants (or their Beneficiaries) will be entitled to benefits from this Plan upon the Participant’s Termination of Employment. Benefits will be based upon the value of a Participant’s Account, which will reflect credits for (i) hypothetical “contributions” made by the Company in an amount equal to a Participant’s Elective Deferrals, (ii) hypothetical contributions made by the Company in amounts as described in Section 4.3, and (iii) additional credits (or debits) for the hypothetical investment performance of those contributions, as hereinafter described.

4.2	Elective Deferrals .

	A Participant may file a written election with the Company (on a form approved by the Company) to defer receipt of any Compensation which the Participant would otherwise be entitled to receive from the Company. Except as otherwise provided herein, the Participant’s election to defer payment of his Compensation must be made at least thirty (30) days before the beginning of the calendar year for which the Compensation is payable. If the Participant elects to defer any Compensation under this Section 4.2, the election may not be revoked during the calendar year in which it was intended to be applicable; however, the Participant may revoke and/or re-elect for Compensation that may be earned subsequent calendar years.

4.3	Company Contributions .

	(a)	Initial Contribution . On or before December 31, 2004, the Company credited to the account of each Participant who was employed by the Company on January 1, 2004, a sum equal to the aggregate amount that the Company would have contributed to such Participant’s SEP during the period from January 1 to December 31, 2003 if the Company’s contributions to the SEP had not been limited by Code Sections 401(a)(17) and 415(c) less the amount actually contributed to such Participant’s SEP during such calendar year.

	(b)	Pre-2008 Annual Contributions . On or before December 31 of each calendar year beginning on or after January 1, 2004 but before January 1, 2008, the Company credited to the account of each Participant a sum equal to the amount that the Company would have contributed to such Participant’s SEP during such calendar year if the Company’s contributions to the SEP for such calendar year had not been limited by Code Sections 401(a)(17)and 415(c) less the amount actually contributed to such Participant’s SEP during such calendar year.

	(c)	2008 Annual Contributions . On or before March 15, 2009, the Company will credit to the account of each Participant a sum equal to the amount that the Company would have contributed to such Participant’s account under the Section 401(k) Plan as Non-Elective Company Contributions during such calendar year if Non-Elective Company Contributions to the Section 401(k) Plan for such calendar year 2008 had not been limited by Code Sections 401(a)(17), 401(k)(3), 401(m), 402(g), and 415(c) less the Non-Elective Company Contributions actually contributed to such Participant’s account under the Section 401(k) Plan during the 2008 calendar year.

	(d)	Cessation of Company Contributions . Notwithstanding anything herein to the contrary, no Company Contribution shall be made hereunder for calendar years beginning on or after January 1, 2009.

4.4	Crediting Elective Contributions to Accounts .

	Elective Deferrals will be credited to a Participant’s Account within fifteen (15) days after the end of the month to which the Elective Deferrals relates. No amount shall actually be set aside for payment under this Plan, and the existence of the Account shall not create and shall not be deemed to create a trust of any kind, or fiduciary relationship between the Company and the Participant or his Beneficiary.

4.5	Taxation .

	Amounts credited to a Participant’s Account under this Plan are subject to rules of taxation (including employment taxes) as may be applicable from time to time. Any taxes owing in a year will be deducted from a Participant’s Compensation pursuant to rules established by the Committee.

4.6	Investment Funds .

	(a)	Investment Funds Offered under Plan . The Company, in conjunction with the advice and recommendations of its investment advisors, shall designate one or more investments to be offered under the Plan, and shall provide the Participant a list of the mutual funds, stocks, bonds securities or other assets into which the Participant’s Account may be deemed invested.

	(b)	Change in Investment Funds Offered under Plan . In its sole discretion, the Company may from time to time, upon advice and recommendations by its investment advisors, designate other investment funds in addition to or in lieu of the investment funds then being offered under the Plan. Any such change in the investment funds offered under the Plan may be made without amending the Plan. Any addition or deletion of a designated investment fund shall be communicated to the Participant.

	(c)	Participant’s Choice of Funds . The Participant’s choice of the investment funds into which an Account is deemed to be invested shall be the sole responsibility of the Participant. At the time an individual becomes a Participant (or within a short period of time thereafter), he may make an initial election regarding such deemed investment funds by submitting a completed investment election form to the Plan Administrator (in such documents as the Plan Administrator may designate).

	(d)	Revised Participant’s Elections Regarding Investment Funds . The Participant may elect to change the investment funds into which his Account is deemed to be invested by completing a new investment election form. On such form, the Participant may designate the investment funds into which future Elective Deferrals and Company Contributions will be deemed to be invested and may change the investment funds into which prior Elective Deferrals and Company Contributions are deemed to be invested. Such changes shall become effective as soon as administratively feasible following the date the investment election form is completed and submitted to the Plan Administrator.

	(e)	Default Provision . In the event the Participant fails to provide instructions on the investment of his Account, the Participant’s Account shall be deemed invested in a money market or similar type fund until further instructions are received from the Participant.

	(f)	Investment Performance Not Guaranteed . The Participant shall assume all risks that the investments attributable to his Account may decrease in value when invested in accordance with his investment instructions made pursuant to this Section 4.5. Notwithstanding any other provision of this Plan to the contrary, the Company shall not be liable to the Participant for any decrease in the value of investments attributable to the Participant’s Account resulting from his investment selections, including, but not be limited to, market value fluctuations, administrative fees, sales commissions, and withdrawal or surrender penalties/charges.

4.7	Company Investments .

	Any investment the Company may actually make in connection with Section 4.5 of the Plan shall at all times remain part of the general assets of the Company, within the Company’s control and available for any Company purpose, subject to the provisions of any Rabbi Trust to which any actual investment is transferred; and the rights of Participants and their Beneficiaries will remain those of unsecured general creditors of the Company.

ARTICLE 5
BENEFIT EVENTS

5.1	Benefits Following Termination of Employment .

	Upon a Participant’s Termination of Employment, the Company will pay benefits to the Participant in the amount and manner described in Article 6.

5.2	Death Benefits .

	(a)	Prior to his death, a Participant shall have the right to designate one or more Beneficiary for the amount payable under this Section 5.2.

	(b)	If the Participant’s Termination of Employment occurs as a result of such Participant’s death, the Participant’s Account will be paid to the Participant’s named Beneficiary(ies) in a lump sum as described in Section 6.3. Payment will occur as soon as may be practicable under procedures established by the Plan Administrator.

	(c)	Unless the Participant’s Beneficiary designation provides to the contrary, the following will apply with respect to payments after the Participant’s death:

		(i)	If the primary Beneficiary survives the Participant but dies before distribution of the amount credited to such Participant’s Account, such amount will be paid to the Beneficiary’s estate.

		(ii)	If the primary Beneficiary does not survive the Participant, payment will be made to a contingent Beneficiary or, if none is named or none survives the Participant, to the Participant’s estate.

5.3	Payor .

	The Company may pay directly any amounts due under the Plan to a Participant or Beneficiary, or it may delegate responsibility for payments to a trustee or other third party.

5.4	One-Time Benefit Event .

	Notwithstanding any other provision to the contrary, a Participant may elect to receive a distribution equal to 100% of his Account under the Plan provided that such election is (i) in writing; and (ii) received by the Plan Administrator no later than December 31, 2008. Such distribution will occur on or before January 31, 2009.

ARTICLE 6
VALUATION AND DISTRIBUTION OF ACCOUNTS

6.1	Valuation of Accounts .

	A Participant’s Account shall be valued as of each Valuation Date under procedures established by the Plan Administrator.

6.2	Commencement of Benefits .

	Benefits will be paid after the Participant’s Benefit Commencement Date, which shall be determined in accordance with the terms of Article 5. Notwithstanding any provision herein to the contrary, to the extent applicable, in no event shall any payment hereunder be made earlier than six months after the date of the Participant’s termination of employment with the Company, except in connection with the Participant’s death.

6.3	Form and Amount of Payment .

	A Participant will receive a full lump sum payable on or within thirty days after the Participant’s Benefit Commencement Date, equal to the Account balance as of the Valuation Date immediately preceding the Benefit Commencement Date

6.4	Deferral of Benefits .

	A Participant will have one opportunity to postpone the commencement of his benefits for his Account, as follows: At least twelve (12) months prior to the date on which distribution would otherwise commence, the Participant may elect to postpone, but not accelerate, his Benefit Commencement Date to a later specified date which may not be earlier than five years after the date on which distribution would otherwise commence. Any election which is determined, considering the date upon which the Participant terminates or is deemed to have terminated under Article 5, to have been made too late, and not otherwise in accordance with this Section 6.4 or Section 409A of the Code, will be void and without effect.

ARTICLE 7
ADMINISTRATION AND CLAIMS PROCEDURE

7.1	Administration .

	The Plan shall be administered by the Board, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Board deems appropriate including the authority to determine eligibility for benefits under the Plan. The Board shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Board shall be final and binding on all persons and parties concerned. Any benefits payable under this Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.

7.2	Expenses; Reliance on Third-Parties .

	Expenses of administration shall be paid by the Company. The Board shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Company with respect to the Plan.

7.3	Annual Statements .

	The Board shall furnish individual annual statements of accrued benefits to each Participant, or Beneficiary, in such form as determined by the Board.

7.4	Appointment of a Conservator .

	The Company may from time to time establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to an individual in the event that individual is declared incompetent and a conservator or other person legally charged with that individual’s care is appointed. Except as otherwise provided herein, when the Company determines that such individual is unable to manage his or her financial affairs, the Company may pay such individual’s benefits to such conservator, person legally charged with such individual’s care, or institution then contributing toward or providing for the care and maintenance of such individual. Any such payment shall constitute a complete discharge of any liability of the Company and the Plan for such individual.

7.5	Limitation of Liability .

	Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to any Participant, former Participant, designated Beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.

7.6	Claims for Benefits .

	All claims for benefits shall be handled through the following procedure:

	(a)	Claim . A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the Plan Administrator at the Company’s then principal place of business.

	(b)	Claim Decision . Upon receipt of a claim, the Plan Administrator shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Plan Administrator may, however, extend the reply period for an additional ninety (90) days for reasonable cause.

	If the claim is denied in whole or in part, the Plan Administrator shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

		(i)	The specific reason or reasons for such denial;

		(ii)	The specific reference to pertinent provisions of this Agreement on which such denial is based;

		(iii)	A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

		(iv)	Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

		(v)	The time limits for requesting a review under Section 7.6(c) and for review under Section 7.6(d).

	(c)	Request for Review . Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Assistant Secretary of the Company review the determination of the Company. Such request must be addressed to the Assistant Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Company’s determination by the Assistant Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Company’s determination.

	(d)	Review of Decision . Within sixty (60) days after the Assistant Secretary’s receipt of a request for review, he will review the Company’s determination. After considering all materials presented by the Claimant, the Assistant Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Assistant Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

ARTICLE 8
FUNDING

8.1	In General .

	This Plan is unfunded. The rights of a Participant or Beneficiary are those of an unsecured general creditor of the Company. In general, benefits will be paid by the Company from its general assets when due.

	The Company, in its sole discretion, shall decide whether or not to underwrite its obligations under the Plan by actually investing amounts equal to the Company contributions in any investment vehicle. If the Company decides to invest its contributions, no Participant or Beneficiary will have any interest in those actual investments, even if those actual investments correspond to the Plan’s hypothetical investments, and even if the amounts invested correspond to the amounts of the Company’s hypothetical Plan contributions. Any investment the Company makes in connection with the Plan shall at all times remain part of the general assets of the Company, subject to the provisions of any Rabbi Trust to which any actual investment is transferred; and the rights of Participants and their Beneficiaries will remain those of unsecured general creditors of the company.

	Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company, including any investments actually acquired in connection with the Company’s obligations under the Plan, except as may be provided for in a Rabbi Trust which the Company may choose to establish, as provided for in Section 8.2. No life insurance policy(ies) or other asset(s) of the Company shall be held by the Company, or by any other person or entity, in a fiduciary capacity, under any trust expressed or implied, for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns (other than under a Rabbi Trust), or shall be held as collateral security for the fulfillment of the obligations of the Company under this Plan. Any and all of the Company’s assets, including such Policies, shall be, and remain, the general, unpledged, unrestricted assets of the Company.

	Whether or not the Company sets aside assets in a Rabbi Trust in connection with this Plan, the Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

8.2	Rabbi Trust .

	The Company may transfer cash, life insurance policies or any other assets to a Rabbi Trust which it may establish in connection with the Plan.

	In that event, Plan benefits may be paid, in the absolute discretion of the Company, from the Company’s other general assets, or from assets held in the Rabbi Trust.

	In the event that assets are placed in a Rabbi Trust, those assets shall remain available to general creditors of the Company in the event of its insolvency.

ARTICLE 9
AMENDMENT, TERMINATION AND CHANGE OF CONTROL

9.1	Amendment or Termination .

	The Company reserves the right to amend, modify, suspend or terminate this Plan in whole or in part at anytime by action of its Board, to the extent permitted under Section 409A of the Code. No amendment shall reduce the Account credited to a Participant under this Plan as of the amendment date, except to the extent that the Participant agrees in writing to such a reduction.

9.2	Change of Control .

	Following a Change of Control (as that term is defined in the Employment Agreement), the Plan shall be continued by the surviving entity, and the participant’s rights under this Plan shall not be impaired without the consent of the Participant.

ARTICLE 10
GENERAL PROVISIONS

10.1	Payment to Minors and Incompetents .

	If any Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is deemed by the Plan Administrator, or adjudged to be, legally incapable of giving valid receipt and discharge for benefits received, benefits will be paid to such person or institution as the Plan Administrator may designate or to the duly appointed guardian of the Participant or Beneficiary, as the case may be. Any payment so made shall be deemed to be in complete discharge of the Participant or Beneficiary’s right to such payment under the Plan.

10.2	No Contract .

	This Plan shall not be deemed to create a contract of employment with any Participant, nor shall any provision of the Plan alter in any way the rights and responsibilities of the Company or any Participant under any employment agreement entered into by the Company and a Participant.

10.3	Use of Masculine and Feminine; Singular and Plural .

	Wherever used in this Plan, the masculine gender will include the feminine gender and the singular will include the plural, unless the context indicates otherwise.

10.4	Non-Alienation of Benefits .

	No amount payable to, or held under the Plan for the account of, any Participant or Beneficiary shall be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. Nor shall any amount payable to, or held under the Plan for the account of, any Participant or Beneficiary be in any manner liable for his debts, contracts, liabilities, engagements, or torts, or be subject to any legal process to levy upon or attach.

10.5	Protective Provisions .

	Each Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder, taking such physical examination as the Insurer may require and such other relevant action as may be requested by the Plan Administrator. If a Participant refuses to cooperate with any requirements reasonably imposed, the Company shall have no further obligation to the Participant under the Plan, other than payment to the Participant of the cumulative amounts previously deferred by the Participant under the Plan.

10.6	Governing Law .

	The provisions of the Plan shall be interpreted, construed, and administered in accordance with the laws of the State of North Carolina, except to the extent federal law (including, but not limited to, ERISA) applies. ERISA will govern all issues and matters relating to the Plan and shall preempt all state laws relating to the Plan.

10.7	Captions .

	The captions contained in the Plan are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge, or describe the scope or intent of the Plan nor in any way affect the construction of any provision of the Plan.

10.8	Compliance with Section 409A of the Code .

	The Plan is intended to comply with Section 409A of the Code. Notwithstanding any provision of the Plan to the contrary, the Plan shall be interpreted, operated and administered in a manner consistent with this intent.

EXECUTED this ______ day of _____________, 2008 by the Company’s duly empowered officer.

			INVESTORS TITLE INSURANCE COMPANY

ATTEST:
			Signature

			Title

			Date

NONQUALIFIED SUPPLEMENTAL RETIREMENT BENEFIT PLAN

As Amended and Restated Effective January 1, 2009

TABLE OF CONTENTS

			Page
PREAMBLE			1

Article 1 DEFINITIONS			2
	1.1	“Account”	2
	1.2	“Base Salary”	2
	1.3	“Beneficiary”	2
	1.4	“Benefit Commencement Date”	2
	1.5	“Board” or “Board of Directors”	2
	1.6	“Bonus Compensation”	2
	1.7	“Cause”	2
	1.8	“Code”	2
	1.9	“Committee”	2
	1.10	“Company”	3
	1.11	“Effective Date”	3
	1.12	“Eligible Employee”	3
	1.13	“Employment Agreement”	3
	1.14	“Employment Period”	3
	1.15	“Participant”	3
	1.16	“Plan”	3
	1.17	“Plan Administrator”	3
	1.18	“Plan Year”	3
	1.19	“Rabbi Trust”	3
	1.20	“Schedule”	3
	1.21	“Termination of Employment”	3
	1.22	“Valuation Date”	3

Article 2 PARTICIPATION			4
	2.1	Eligible Class	4
	2.2	Commencement of Participation	4

Article 3 ESTABLISHMENT OF ACCOUNTS			5
	3.1	Accounts	5
	3.2	Credits and Debits to Accounts	5

Article 4 CONTRIBUTIONS AND BENEFITS			6
	4.1	Benefits	6
	4.2	Contributions	6
	4.3	Changes in Base Salary and/or Base Compensation	6
	4.4	Crediting of Contributions	6

	4.5	Taxation	6
	4.6	Deemed Investment of Contributions	7
	4.7	Company Investments	7

Article 5 BENEFIT EVENTS			8
	5.1	Benefits Following Retirement and Certain Other Events	8
	5.2	Benefits Following a Termination for Disability	8
	5.3	Death Benefits	8
	5.4	Payor	9
	5.5	One-Time Benefit Event	9

Article 6 VALUATION AND DISTRIBUTION OF ACCOUNTS			10
	6.1	Valuation of Accounts	10
	6.2	Commencement of Benefits	10
	6.3	Form and Amount of Payment Options	10
	6.4	Election of Payment Options and Deferral of Benefits	11

Article 7 ADMINISTRATION AND CLAIMS PROCEDURE			12
	7.1	Administration	12
	7.2	Expenses; Reliance on Third Parties	12
	7.3	Annual Statements	12
	7.4	Appointment of a Conservator	12
	7.5	Limitation of Liability	12
	7.6	Claims for Benefits	13

Article 8 FUNDING			14
	8.1	In General	14
	8.2	Rabbi Trust	14

Article 9 AMENDMENT, TERMINATION AND CHANGE OF CONTROL			15
	9.1	Amendment or Termination	15
	9.2	Change of Control	15

Article 10 GENERAL PROVISIONS			16
	10.1	Payment to Minors and Incompetents	16
	10.2	No Contract	16
	10.3	Use of Masculine and Feminine; Singular and Plural	16
	10.4	Non-Alienation of Benefits	16
	10.5	Protective Provisions	16
	10.6	Governing Law	16
	10.7	Captions	17
	10.8	Compliance with Section 409A of the Code	17

PREAMBLE

Investors Title Insurance Company (the “Company”) previously established a non-qualified deferred compensation plan referred to as the Investors Title Insurance Company Non-qualified Supplemental Retirement Benefit Plan (the “Plan”), originally effective November 17, 2003. The Company is amending and restating the Plan effective January 1, 2009 as set forth herein to (i) reflect certain design changes to the Plan, (ii) provide for the Plan’s documentary compliance with the requirements of Section 409A of the Code, and (iii) otherwise meet current needs.

The purpose of this Plan is to provide additional retirement benefits to Eligible Employees on a non-qualified, tax-deferred basis. This Plan shall be unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan is intended to be effective with respect to Compensation earned after October 1, 2003.

Benefits are based upon hypothetical Company contributions credited to Participant “Accounts”.

Account balances resulting from employer contributions may be credited with interest, at a rate determined by the Company, or with amounts reflecting and corresponding to the performance (i.e., income, gains, losses, etc.) of a designated security or index. Further, the Company may choose to set aside assets relating to Plan obligations in a Rabbi Trust, the corpus of which will be available to the Company’s creditors in the event of bankruptcy. However, the Company is under no obligation to invest amounts deemed contributed to the Plan or to set aside funds in a Rabbi Trust. In all cases, the Company may elect to pay the benefits promised hereunder from other general assets. Notwithstanding the fact that the Company may set aside assets in respect of its obligations under the Plan, the Plan is unfunded and the rights of Participants and Beneficiaries are limited to those of general, unsecured creditors of the Company.

ARTICLE 1
DEFINITIONS

The following words and phrases when used in the Plan shall have the following meanings, unless a different meaning is plainly required by the context:

1.1	“ Account ” means the bookkeeping account established for the measurement of the Company’s accumulated liability to a Participant under the Plan. Each Participant’s Account will reflect the undistributed balance to the credit of the Participant, representing accumulated Company Plan contributions, and the hypothetical investment earnings, gains and losses credited to the Account under the terms of the Plan.

1.2	“ Base Salary ” has the meaning given to it in Section 3 of the Employment Agreement.

1.3	“ Beneficiary ” means the person, persons or trust designated by the Participant or former Participant to receive benefits under the Plan in the event of the Participant’s death prior to the full distribution of his Account. A Participant shall designate his Beneficiary or Beneficiaries in writing under the specific procedures as shall be established by the Plan Administrator. A Participant may change his Beneficiaries at any time by delivering written instructions to the Plan Administrator. In the event a Participant dies without a valid designation of Beneficiary in effect, the Participant’s remaining Account shall be payable to his spouse or, if the Participant is not married at the time of death, to his estate.

1.4	“ Benefit Commencement Date ” means the date upon which the Participant’s Termination of Employment occurs or is deemed to occur in accordance with the provisions of Article 4 and after which the distribution of benefits to the Participant will commence in accordance with the provisions of Article 4 and Article 5.

1.5	“ Board” or “Board of Directors ” means the Board of Directors of Investors Title Insurance Company.

1.6	“ Bonus Compensation ” has the meaning given to it in Section 3 of the Employment Agreement.

1.7	“ Cause ” has the meaning given in Section 4 of the Employment Agreement.

1.8	“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and any regulations issued thereunder. Reference to any section of the Code shall include any successor provision thereto.

1.9	“ Committee ” means the Compensation Committee of Investors Title Company or such other person or persons designated by the Company to determine the eligibility of employees for participation in the Plan in accordance with the provisions of Article 2, and to provide oversight to the administration of the plan in accordance with Article 7.

1.10	“ Company ” means Investors Title Insurance Company, a North Carolina corporation, and its successor or successors. The Company is a wholly-owned subsidiary of Investors Title Company.

1.11	“ Effective Date ” means November 17, 2003.

1.12	“ Eligible Employee ” means an employee of the Company who is included in the eligible class described in Section 2.1, and who is listed on the Schedule.

1.13	“ Employment Agreement ” means the agreement, as amended from time to time, entered into between an Eligible Employee and the Company, which contains the certain defined terms used herein along with the general terms and conditions of the Eligible Employee’s employment.

1.14	“ Employment Period ” has the meaning given to it in Section 1 of the Employment Agreement.

1.15	“ Participant ” means an Eligible Employee for whom an Account is being maintained under the terms of the Plan.

1.16	“ Plan ” means the Investors Title Insurance Company Non-Qualified Supplemental Retirement Benefit Plan as set forth in this document and as amended from time to time.

1.17	“ Plan Administrator ” means the Company.

1.18	“ Plan Year ” means each calendar year commencing January 1, 2004 and thereafter.

1.19	“ Rabbi Trust ” means, for the purposes of this Plan, a grantor trust under Subpart E of Subchapter J of Chapter I of the Code established by an employer in connection with a nonqualified deferred compensation or supplemental retirement benefit plan, the assets of which may be reached by the employer grantor’s general creditors.

1.20	“ Schedule ” means the document which lists the Eligible Employees who are Participants in the Plan, as such Schedule is amended from time to time.

1.21	“ Termination of Employment ” means any termination of the employee/employer relationship between a Participant and the Company for any reason including the Participant’s Retirement, death, Termination for Disability, Termination for Cause, Termination without Cause, Termination for Good Reason or termination following a Change in Control, as such terms are defined in the Employment Agreement. For purposes of the Plan, whether a “Termination of Employment” has occurred shall be determined in a manner consistent with the requirements of Section 409A of the Code and the Company’s 409A Policy, if any.

1.22	“ Valuation Date ” means the last day of each calendar quarter, and is the date on which Participant Account values are determined.

ARTICLE 2
PARTICIPATION

2.1 Eligible Class .

(a)
Except as provided in (b) and (c) below, an individual who is employed by the Company is an Eligible Employee with respect to a particular Plan Year only if he is both (i) within a select group of management or highly compensated Employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, as determined by the Committee in its sole discretion, and (ii) identified by the Company as an Eligible Employee and listed in the Schedule A, attached hereto.

(b)
Each Eligible Employee must cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder. Notwithstanding any provision in the Plan to the contrary, an individual who would otherwise be eligible to receive benefits under the Plan shall nevertheless be considered ineligible, and may be barred by the Company from participation in the Plan, (i) if he refuses to cooperate with any requirement which the Committee or Plan Administrator may reasonably impose; or (ii) if the Company chooses, in its discretion, to purchase one or more life insurance policies on the life of the individual in connection with its obligations under this plan, and the individual fails to submit a complete and accurate application in connection with the acquisition of the policy(ies), or fails to submit to any physical examination that the insurer may require, or fails to provide any other information that the insurer or Plan Administrator may reasonably request or to comply with any other requirement which the insurer may reasonably impose.

2.2 Commencement of Participation .

Each Eligible Employee shall first become a Participant as of the initial pay period for the first Plan Year following the date upon which he is first determined by the Committee to be an Eligible Employee.

ARTICLE 3
ESTABLISHMENT OF ACCOUNTS

3.1	Accounts .

	The Plan Administrator will establish and maintain separate memorandum Accounts for each Participant, for bookkeeping purpose only, which will be used to measure the amount of the Company’s liability to each Participant and Beneficiary under this Plan.

3.2	Credits and Debits to Accounts .

	The Plan Administrator will, as often and as soon as may be reasonable and practicable, make such adjustments to the Accounts, by credit (addition) or debit (reduction), as may be necessary and/or appropriate to reflect:

	(a)	Company contributions,

	(b)	any accrued interest (if Company contributions are deemed to be invested at interest), and

	(c)	any income and/or expense, and any gain or loss (i.e., increase or decrease, whether realized or unrealized), associated with any other investment(s) in which the contributions are deemed be invested, so that the balance of any portion of the Account that is deemed to be invested will be adjusted in the same manner and amount that it would have been adjusted had the Account investment actually been made (i.e., so as to reflect the net amount invested, and any changes in the investment’s market or net asset value).

ARTICLE 4
CONTRIBUTIONS AND BENEFITS

4.1	Benefits .

	Participants (or their Beneficiaries) will be entitled to benefits from this Plan upon the Participant’s Termination of Employment for any reason. Benefits will be based upon the value of a Participant’s Account, which will reflect credits for hypothetical “contributions” made by the Company, as well as additional credits (or debits) for the hypothetical investment performance of those Plan contributions, as hereinafter described.

4.2	Contributions .

	For each calendar quarter during the Employment Period, the Company shall make a contribution on the Participant’s behalf to the Plan in an amount equal to twenty-two percent (22%) of the Participant’s Base Salary and Bonus Compensation paid during such calendar quarter. Notwithstanding the foregoing, however, if the Participant has a Termination of Employment before the Company has contributed said amount for twenty (20) calendar quarters, then in such event the Company shall make a lump sum contribution to the Plan equal to the number of calendar quarters less than twenty (20), using as a base for determining such amount twenty-two percent (22%) of the Participant’s Base Salary and Bonus Compensation for the twelve (12) months preceding the Termination of Employment. After the Company has contributed to the Plan an amount equal to twenty-two percent (22%) of the Participant’s Base Salary and Bonus Compensation paid during the calendar quarter for twenty (20) calendar quarters, the Company, in its sole discretion, may determine the amount, if any, contributed for subsequent calendar quarters during the Employment Period.

4.3	Changes in Base Salary and/or Base Compensation .

	The rate of Company contribution shall continue in effect for the Employment Period to which it applies, notwithstanding any change in the Participant’s Base Salary and Bonus Compensation which may occur during such year.

4.4	Crediting of Contributions .

	Company contributions to the Plan will be credited to a Participant’s Account within ten (10) days after the end of the calendar quarter to which the contribution relates. No amount shall actually be set aside for payment under this Plan, and the existence of the Account shall not create and shall not be deemed to create a trust of any kind, or fiduciary relationship between the Company and the Participant or his Beneficiary.

4.5	Taxation .

	Amounts credited to a Participant’s account under this Plan are subject to rules of taxation (including employment taxes) as may be applicable from time to time. Any taxes owing in a year will be deducted from a Participant’s Base Salary and/or Bonus Compensation pursuant to rules established by the Committee.

4.6	Deemed Investment of Contributions .

	Solely for the purpose of measuring the Company’s liability to a Participant under the Plan, Company contributions credited to Participant Accounts will be deemed invested as the Participant/Committee shall from time to time determine. Credits to Participant Accounts for hypothetical investment performance will, if amounts are deemed invested at interest, be based upon a rate of interest determined by the Board from time to time. Otherwise, such credits (or debits) will be based upon the performance of a security, index or other investment (or upon any other method) determined by the Committee and specified in an Appendix to this Plan, which will be amended, as appropriate, to reflect any change in the investment made by the Committee.

4.7	Company Investments .

	The Company, in its sole discretion, shall decide whether or not to underwrite its obligations under the Plan by actually investing its hypothetical contributions. If the Company decides to invest any amounts, Plan Participants and Beneficiaries shall have no interest (other than those of unsecured general creditors) in such actual investments even if they correspond to the securities, index or other hypothetical investments used for the measurement of Plan benefits. Any investment the Company may actually make in connection with the Plan shall at all times remain part of the general assets of the Company, within the Company’s control and available for any Company purpose, subject to the provisions of any Rabbi Trust to which any actual investment is transferred; and the rights of Participants and their Beneficiaries will remain those of unsecured general creditors of the Company.

ARTICLE 5
BENEFIT EVENTS

5.1	Benefits Following Retirement and Certain Other Events .

	Upon a Participant’s Termination of Employment for any reason other than as a result of such Participant’s Termination for Disability (as that term is defined in the Employment Agreement) or death, the Company will pay benefits to the Participant (or his Beneficiary) in the amount and manner described in Article 6.

5.2	Benefits Following a Termination for Disability .

	(a)	In the event that a Participant’s Termination of Employment is the result of such Participant’s Termination for Disability (as that term is defined in the Employment Agreement), such Participant’s Termination of Employment will be deemed to have occurred on the date specified by the Board in accordance with Section 409A of the Code and the Company’s 409A Policy, if any, and the Company will pay benefits to the Participant (or his Beneficiary) in the amount and manner as described in Article 6.

	(b)	For the purpose of this Article, subject to Section 409A of the Code and the terms of the Company’s 409A Policy, a Participant who is otherwise disabled and absent from employment with the Company due to that disability will be considered to be employed in the active, full-time service of the Company for as long as he remains disabled.

5.3	Death Benefits .

	(a)	Prior to his death, a Participant shall have the right to designate a Beneficiary or beneficiaries for the amount payable under this Section 5.3, and to select a separate payment option for benefits commencing upon death, upon a form approved by the Plan Administrator.

	(b)	If the Participant’s Termination of Employment occurs as a result of such Participant’s death, the Participant’s Account will be paid to the Participant’s named Beneficiary(ies) according to a form of payment option described in Section 6.3 (or otherwise permitted by the Plan Administrator) and elected by the Participant separately for this post-death benefit distribution. Payment of these amounts will commence as soon as may be practicable under procedures established by the Plan Administrator.

	(c)	If a Participant dies after his Benefit Commencement Date but prior to receiving a distribution of his entire Account, and the Participant had not elected a single life annuity option for his retirement benefit, the balance remaining in his Account (or, in the event that the Participant elected an annuity payable over the life of Participant and spouse, the survivor annuity) will be paid to the Participant’s named Beneficiary(ies) (or surviving annuitant) according to the Participant’s election for retirement benefits, for the remainder of the period over which the retirement benefits were to be paid.

(d)	Unless the Participant’s Beneficiary designation provides to the contrary, the following will apply with respect to payments after the Participant’s death:

	(i)	If the primary Beneficiary survives the Participant but dies before all amounts due to the Beneficiary under the Plan are paid out, the present value of any payments due after the death of the primary Beneficiary will be paid to the Beneficiary’s estate in a lump sum.

	(ii)	If the primary Beneficiary does not survive the Participant, any payments due after the death of the Participant will be paid to the contingent Beneficiary or, if none is named or none survives the Participant, the present value of all amounts not yet paid to the Participant will be paid to the Participant’s estate in a lump sum.

	(iii)	In the case of installment payments other than an annuity, the present value of amounts not yet paid will be the remaining Account Balance.

	(iv)	In the case of an annuity, the present value will be determined by the Plan Administrator using the mortality table set forth in Revenue Ruling 95-6, 1995-1 CB 80 and a reasonable interest determined by the Plan Administrator considering the type of annuity and prevailing market rates.

5.4	Payor .

	The Company may pay directly any amounts due under the Plan to a Participant or Beneficiary, or it may delegate responsibility for payments to a trustee or other third party.

5.5	One-Time Benefit Event .

	Notwithstanding any other provision to the contrary, a Participant may elect to receive a distribution equal to 100% of his Account under the Plan provided that such election is (i) in writing; and (ii) received by the Plan Administrator no later than December 31, 2008. Such distribution will occur on January 15, 2009.

ARTICLE 6
VALUATION AND DISTRIBUTION OF ACCOUNTS

6.1	Valuation of Accounts .

	A Participant’s Account shall be valued as of each Valuation Date under procedures established by the Plan Administrator.

6.2	Commencement of Benefits .

	Benefits will be paid after the Participant’s Benefit Commencement Date, which shall be determined in accordance with the terms of Article 5. Notwithstanding any provision herein to the contrary, to the extent applicable, in no event shall any payment hereunder be made earlier than six months after the date of the Participant’s termination of employment with the Company, except in connection with the Participant’s death.

6.3	Form and Amount of Payment Options .

	A Participant may elect the form of payment option applicable to his Account. Payment options available under the Plan are:

	(a)	Lump Sum . A full lump sum payable on or within thirty days after the Participant’s Benefit Commencement Date, equal to the Account balance as of the Valuation Date immediately preceding the Benefit Commencement Date; or

	(b)	Equal Annual Installments . For Account balances of not less than $10,000, equal annual installments payable over five, ten, fifteen or twenty years, beginning on or within thirty days after the Participant’s Benefit Commencement Date. Annual installments shall be equal to the Account balance on the Valuation Date immediately preceding first payment divided by the number of years in the elected installment period, plus interest to the date of each payment at such rate as the Board may determine from time to time (but not less than five percent (5%)); or

	(c)	Recalculated Annual Installments . For Account balances of not less than $10,000, annual installments payable over five, ten, fifteen or twenty years, beginning on or within thirty days after the Participant’s Benefit Commencement Date. Annual installments shall be, for the first payment, equal to the Account balance on the Valuation Date immediately preceding the first payment divided by the number of years in the elected installment period, and for the remaining payments, equal to the Account Balance on the Valuation Date immediately preceding the payment, divided by the remaining number of installment payments to be made. For the purpose of determining the amount of all payments following, the first payment, interest shall be credited to the Account Balance remaining after the first payment at such rate as the Board may determine from time to time (but not less than five percent (5%)); or

	(d)	Life Annuity Options . For Account balances of not less than $10,000, equal annual installments, beginning on or within thirty days after the Participant’s Benefit Commencement Date, payable over the life of the Participant, or over the lives of the Participant and spouse, with or without a minimum period certain, as elected by the Participant at the commencement of his participation in the Plan, or in a later change of form of payment made pursuant to Section 6.3. This annuity will be the actuarial equivalent of the Account balance on the Valuation Date immediately preceding first payment, as determined by the Plan Administrator using the mortality table set forth in Revenue Ruling 95-6, 1995-1 CB 80 and a reasonable interest rate determined by the Plan Administrator considering the type of annuity and prevailing market rates.

6.4	Election of Payment Options and Deferral of Benefits .

	(a)	Elections as to the manner of distribution of the Participant’s Account will be made upon forms provided by and according to procedures established by the Plan Administrator. At the commencement of an Eligible Employee’s participation in the Plan, he shall be required to make a written election indicating his form of payment option. This election will be binding and apply to all amounts held for the Participant under the Plan except as provided under (b) below.

	(b)	A Participant will have one opportunity to postpone the commencement of his benefits and/or change his initial election regarding the form of payment option for his Account, as follows: At least twelve (12) months prior to the date on which distribution would otherwise commence, the Participant may elect to postpone, but not accelerate, his Benefit Commencement Date to a later specified date which may not be earlier than five years after the date on which distribution would otherwise commence. A Participant may also elect to specify a different form of payment, provided, however, that any such election will provide for a specified date for distribution which may not be earlier than five years after the date on which distribution would otherwise commence. Any election which is determined, considering the date upon which the Participant terminates or is deemed to have terminated under Article 5, to have been made too late, and not otherwise in accordance with this Section 6.4 or Section 409A of the Code, will be void and without effect.

ARTICLE 7
ADMINISTRATION AND CLAIMS PROCEDURE

7.1	Administration .

	The Plan shall be administered by the Board, which shall have the authority, duty and power to interpret and construe the provisions of the Plan as the Board deems appropriate including the authority to determine eligibility for benefits under the Plan. The Board shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. The interpretations, determinations, regulations and calculations of the Board shall be final and binding on all persons and parties concerned. Any benefits payable under this Plan will be paid only if the Plan Administrator decides in its discretion that the applicant is entitled to them.

7.2	Expenses; Reliance on Third Parties .

	Expenses of administration shall be paid by the Company. The Board shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counselor other person employed or retained by the Company with respect to the Plan.

7.3	Annual Statements .

	The Board shall furnish individual annual statements of accrued benefits to each Participant, or Beneficiary, in such form as determined by the Board.

7.4	Appointment of a Conservator .

	The Company may from time to time establish rules and procedures which it determines to be necessary for the proper administration of the Plan and the benefits payable to an individual in the event that individual is declared incompetent and a conservator or other person legally charged with that individual’s care is appointed. Except as otherwise provided herein, when the Company determines that such individual is unable to manage his or her financial affairs, the Company may pay such individual’s benefits to such conservator, person legally charged with such individual’s care, or institution then contributing toward or providing for the care and maintenance of such individual. Any such payment shall constitute a complete discharge of any liability of the Company and the Plan for such individual.

7.5	Limitation of Liability .

	Notwithstanding any provision herein to the contrary, neither the Company nor any individual acting as an employee or agent of the Company shall be liable to any Participant, former Participant, designated Beneficiary, or any other person for any claim, loss, liability or expense incurred in connection with the Plan, unless attributable to fraud or willful misconduct on the part of the Company or any such employee or agent of the Company.

7.6	Claims for Benefits .

	All claims for benefits shall be handled through the following procedure:

	(a)	Claim . A person who believes that he is being denied a benefit to which he is entitled under the Plan (hereinafter referred to as a “Claimant”) may file a written request for such benefit with the Company, setting forth his claim. The request must be addressed to the Plan Administrator at the Company’s then principal place of business.

	(b)	Claim Decision . Upon receipt of a claim, the Plan Administrator shall advise the Claimant that a reply will be forthcoming within ninety (90) days and shall, in fact, deliver such reply within such period. The Plan Administrator may, however, extend the reply period for an additional ninety (90) days for reasonable cause.

		If the claim is denied in whole or in part, the Plan Administrator shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth:

		(i)	The specific reason or reasons for such denial;

		(ii)	The specific reference to pertinent provisions of this Agreement on which such denial is based;

		(iii)	A description of any additional material or information necessary for the Claimant to perfect his claim and an explanation why such material or such information is necessary;

		(iv)	Appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and

		(v)	The time limits for requesting a review under Section 7.6(c) and for review under Section 7.6(d).

	(c)	Request for Review . Within sixty (60) days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Assistant Secretary of the Company review the determination of the Company. Such request must be addressed to the Assistant Secretary of the Company, at its then principal place of business. The Claimant or his duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Company. If the Claimant does not request a review of the Company’s determination by the Assistant Secretary of the Company within such sixty (60) day period, he shall be barred and estopped from challenging the Company’s determination.

	(d)	Review of Decision . Within sixty (60) days after the Assistant Secretary’s receipt of a request for review, he will review the Company’s determination. After considering all materials presented by the Claimant, the Assistant Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Agreement on which the decision is based. If special circumstances require that the sixty (60) day time period be extended, the Assistant Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than one hundred twenty (120) days after receipt of the request for review.

ARTICLE 8
FUNDING

8.1	In General .

	This Plan is unfunded. The rights of a Participant or Beneficiary are those of an unsecured general creditor of the Company. In general, benefits will be paid by the Company from its general assets when due.

	The Company, in its sole discretion, shall decide whether or not to underwrite its obligations under the Plan by actually investing amounts equal to the Company contributions in any investment vehicle. If the Company decides to invest its contributions, no Participant or Beneficiary will have any interest in those actual investments, even if those actual investments correspond to the Plan’s hypothetical investments, and even if the amounts invested correspond to the amounts of the Company’s hypothetical Plan contributions. Any investment the Company makes in connection with the Plan shall at all times remain part of the general assets of the Company, subject to the provisions of any Rabbi Trust to which any actual investment is transferred; and the rights of Participants and their Beneficiaries will remain those of unsecured general creditors of the Company.

	Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interests in any specific property or assets of the Company, including any investments actually acquired in connection with the Company’s obligations under the Plan, except as may be provided for in a Rabbi Trust which the Company may choose to establish, as provided for in Section 8.2. No life insurance policy(ies) or other asset(s) of the Company shall be held by the Company, or by any other person or entity, in a fiduciary capacity, under any trust expressed or implied, for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns (other than under a Rabbi Trust), or shall be held as collateral security for the fulfillment of the obligations of the Company under this Plan. Any and all of the Company’s assets, including such Policies, shall be, and remain, the general, unpledged, unrestricted assets of the Company.

	Whether or not the Company sets aside assets in a Rabbi Trust in connection with this Plan, the Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future.

8.2	Rabbi Trust .

	The Company may transfer cash, life insurance policies or any other assets to a Rabbi Trust which it may establish in connection with the Plan.

	In that event, Plan benefits may be paid, in the absolute discretion of the Company, from the Company’s other general assets, or from assets held in the Rabbi Trust.

	In the event that assets are placed in a Rabbi Trust, those assets shall remain available to general creditors of the Company in the event of its insolvency.

ARTICLE 9
AMENDMENT, TERMINATION AND CHANGE OF CONTROL

9.1	Amendment or Termination .

	The Company reserves the right to amend, modify, suspend or terminate this Plan in whole or in part at anytime by action of its Board, to the extent permitted under Section 409A of the Code. No amendment shall reduce the Account credited to a Participant under this Plan as of the amendment date, except to the extent that the Participant agrees in writing to such a reduction.

9.2	Change of Control .

	Following a Change of Control (as that term is defined in the Employment Agreement), the Plan shall be continued by the surviving entity, and the Participant’s rights under this Plan shall not be impaired without the consent of the Participant.

ARTICLE 10
GENERAL PROVISIONS

10.1	Payment to Minors and Incompetents .

	If any Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is deemed by the Plan Administrator, or adjudged to be, legally incapable of giving valid receipt and discharge for benefits received, benefits will be paid to such person or institution as the Plan Administrator may designate or to the duly appointed guardian of the Participant or Beneficiary, as the case may be. Any payment so made shall be deemed to be in complete discharge of the Participant or Beneficiary’s right to such payment under the Plan.

10.2	No Contract .

	This Plan shall not be deemed to create a contract of employment with any Participant, nor shall any provision of the Plan alter in any way the rights and responsibilities of the Company or any Participant under such Participant’s Employment Agreement.

10.3	Use of Masculine and Feminine; Singular and Plural .

	Wherever used in this Plan, the masculine gender will include the feminine gender and the singular will include the plural, unless the context indicates otherwise.

10.4	Non-Alienation of Benefits .

	No amount payable to, or held under the Plan for the account of, any Participant or Beneficiary shall be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to so anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be void. Nor shall any amount payable to, or held under the Plan for the account of, any Participant or Beneficiary be in any manner liable for his debts, contracts, liabilities, engagements, or torts, or be subject to any legal process to levy upon or attach.

10.5	Protective Provisions .

	Each Participant shall cooperate with the Company by furnishing any and all information requested by the Company in order to facilitate the payment of benefits hereunder, taking such physical examination as the Insurer may require and such other relevant action as may be requested by the Plan Administrator. If a Participant refuses to cooperate with any requirements reasonably imposed, the Company shall have no further obligation to the Participant under the Plan, other than payment to the Participant of the cumulative amounts previously deferred by the Participant under the Plan.

10.6	Governing Law .

	The provisions of the Plan shall be interpreted, construed, and administered in accordance with the laws of the of the State of North Carolina, except to the extent federal law (including, but not limited to, ERISA) applies. ERISA will govern all issues and matters relating to the Plan and shall preempt all state laws relating to the Plan.

10.7	Captions .

	The captions contained in the Plan are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge, or describe the scope or intent of the Plan nor in any way affect the construction of any provision of the Plan.

10.8	Compliance with Section 409A of the Code .

	The Plan is intended to comply with Section 409A of the Code. Notwithstanding any provision of the Plan to the contrary, the Plan shall be interpreted, operated and administered in a manner consistent with this intent.

EXECUTED this _____ day of ________________, 2008 by the Company’s duly empowered officer.


			INVESTORS TITLE INSURANCE COMPANY

ATTEST :
			Signature

			Title

			Date

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
Investors Title Company
Chapel Hill, North Carolina

We consent to the incorporation by reference in the registration statement No. 333-33903 of Investors Title Company (the “Company”) and Subsidiaries on Form S-8 of our reports dated March 6, 2009, with respect to the consolidated financial statements of Investors Title Company, and the effectiveness of internal control over financial reporting, which reports appear in Investors Title Company’s 2008 Annual Report on Form 10-K.

Our audits of the consolidated financial statements referred to in our aforementioned report also included the financial statement schedules of the Company, listed in item 15. These financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects, the information set forth herein.

Dixon Hughes PLLC
High Point, North Carolina
March 6, 2009

Certification

Exhibit 31(i)

I, J. Allen Fine, certify that:

1.	I have reviewed this annual report on Form 10-K of Investors Title Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of this annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 9, 2009

/s/ J. Allen Fine
J. Allen Fine
Chief Executive Officer

Certification

Exhibit 31(ii)

I, James A. Fine, Jr., certify that:

1.	I have reviewed this annual report on Form 10-K of Investors Title Company;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of this annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 9, 2009

/s/ James A. Fine, Jr.
James A. Fine, Jr.
Chief Financial Officer

Exhibit 32

Certifications
Pursuant to 18 U.S.C. Section 1350,
As adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of Investors Title Company, a North Carolina corporation (the "Company") for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company does hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 9, 2009		/s/ J. Allen Fine
		J. Allen Fine
		Chief Executive Officer


Dated: March 9, 2009		/s/ James A. Fine, Jr.
		James A. Fine, Jr.
		Chief Financial Officer